Extraordinary low risk 'top up' for YE....The market seems to be slow to recognise what's happened.
BYE's share of reserves for only SM 71 has increased from a total of 1P, 2P and 3P of 520,000bbls to 2,567,000 bbls....ie it's now derisked. At the same time, the increase in these reserves was NOT at the expense of conversion of BYE's share of Prospective resources to 1-3P. BYE's Prospective Resources before today's ann was 2,277,000 bbls and it's now declined marginally to 2,043,000 bbls. In total, BYE's reserves have increased from 2.8 million to 4.6 million bbls.
In addition, we have the company indicating that they are so confident of finding more oil nearby that they plan to have up to five wells to fully exploit the field, with production starting in about 12 months.
Valuing only SM71 reserves at WTI of US$50 per bbl (add a few dollars for our Louisiana Sweet) less operating, discovery and development costs of around $15 per bbl we get a profit before tax of around US$35 per bbl or more. After tax, the profit is around A$35 per bbl, and for a total of 4.6 mill bbls to BYE is around A$140 million, or around 50 cents per BYE share. (We have to discount this value for time to extract, but given the fast and low cost field development and the prospects of a firming oil price (ann says BYE has used US$60 per bbl by 2024) then the discounting shouldn't hit the 50c valuation very much.
As Little T says, there are also many other prospects - with Biv Peak being probably worth as much or more than SM71. It's not hard to see that BYE will be worth $1 per share next year.
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