"Conversion of 500 BCF to 2P reserves could see a market capitalisation in the range of $500m - $1b."
At an exchange rate of ?1=$1.58 that 500 BCF converts to ?315m - ?630m.
A similar find to Leyshon would therefore be ?1.26 - ?2.52 on 0.5 tcf.
Leyshon are targetting up to 3.8 TCF in place and if 70% recoverable gives about 2.6 TCF reserve potential and after 40% take up by the partner would leave circa 1.5 TCF net reserve potential to Leyshon.
So if 500 BCF reserve (O.5 tcf) is being valued at $500m/?315m - $1b/?630m by Argonaut analysts for SinoGas, that leaves the same reserve potential find worth ?1.26 - ?2.52 to Leyshon (249m Leyshon shares x ?1.26 = ?313m or 249m shares x ?2.52 = ?626m = valuation given to 500 BCF for Sino Gas at $500m/315m - $1b/?630m).
Therefore 1 TCF of reserves = ?2.52 - ?5.04 and 1.5 TCF of reserves worth ?3.78 - ?7.56 potential for Leyshon and real blue sky if that was to come in. Argonaut analyst gives the valuation on 500 BCF so those are the figures you would arrive at for Leyshon on varying success case points.
That ties in with the CEOs comment that a commercial discovery for LRL could be worth 'pounds'. "
LRL Price at posting:
24.0¢ Sentiment: Buy Disclosure: Held
