An interesting article on Origins Ironbark below. My reading of...

An interesting article on Origins Ironbark below.

My reading of the data is

In 2009 they paid $660M for 249Pj reserves and 635Pj contingent reserves.

In 2018 they concluded that there was only
129 Pj reserves and 192 Pj contingents which they value at $279M.

So in 2009 they paid 2.65M per PJ of reserves for Ironbark (660/249) ignoring contingents.

In 2018 they valued Ironbark at 2.16M per PJ of reserves (279/129) ignoring contingents.

This is not gas in the ground value but what they paid and what they think its worth for the Pj's.

Also note they regard this as of lower value then normal as it is "a small gas acreage with varying depth levels of coal".

Comet has 564PJ in reserves and 998PJ in contingents.

Using the Origin valuation for small acreage with varying coal depths of $2.16M per PJ comets share of Mahalo Reserves are worth $1218.24M (excluding Galilee etc).

Using what they actually paid for small acreage for Ironbark of $2.65M per PJ Comets share of Muhalo is worth $1494.6M.

Using these numbers just Mahalo is worth 1.81 to 2.22 per share (1218/673, 1494/673) based on Origins purchase price and carry value of Ironbark. Just for Mahalo. With no adjustment for the fact that Mahalo appears to be fairly constant coal depth perfect for very long horizontal wells. (Was the coal depth on Mira and early Muhalo wells at a similar depth?)

If I have made an error in my calculations please point it out, if not 30cents looks pretty cheap.


Origin takes $700m bath on gas assets
By Mathew Dunckley

8 February 2018 — 10:20am

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Origin Energy has slashed the value of a major coal seam gas project in Queensland by more than $500 million as it drastically recasts its expectations for production.
Origin told the ASX on Thursday morning that it would book a $355 million after-tax impairment on its Ironbark CSG field and a further after-tax $173 million writedown on the Lattice business it sold recently.
Origin Energy has taken a massive writedown on a coal seam gas field in Queensland
Photo: Louie Douvis
Origin bought the field for $655 million in 2009 from Paul Fudge and previously held the field on its books at $793 million.
Mr Fudge was one of the early entrants into Australia's coal seam gas market, shifting to resources from the textile importing and retail industry in the 1990s. He acquired a number of tenements at a time when the local sector was still in its infancy, through his company Pangea Resources, and made his fortune selling two parcels of lands to Origin, one for $70 million in 2006 and Ironbark $660 million in 2009.
Origin's pre-tax writedown on Ironbark will push its value in Origin's books number down by $514 million to a new carrying value of just $279 million.

The company said in a statement that the Ironbark writedown was due to a new assessment of the amount of gas it would produce.
Before the announcement, Origin had expected Ironbark to yield 249 petajoule equivalent of gas but that amount now has been almost halved to 129 petajoule equivalent.
Origin had also flagged previously the potential for less certain production of up to 635 petajoule equivalent but that number has been revised to 192 petajoule equivalent.
Wood Mackenzie oil and gas analyst Saul Kavonic said the announcement wasn't surprising.
"Ironbark is a relatively small gas resource and suffers from varying coal depth and quality changes across the acreage," Mr Kavonic said.
"Like the rest of the CSG acreage experience, the rocks are unlikely to produce anywhere near the levels envisaged a decade ago.
"Despite high gas prices, the economics for Ironbark still look poor."
RBC Capital Markets analyst Ben Wilson said the writedown would be positive for Origin in the long term.
"This impairment today is a continuation of the spending hangover that remains from the industry’s coal bed methane splurge over 2008 to 2010; Origin has also previously impaired around $600 million of its Poseidon asset which was purchased from Karoon Gas for about $650m in 2014," Mr Wilson said.
"We do note, however, that these upstream investments were made under the watch of former management. We think current management has taken positive steps to rationalise upstream activities and reduce gearing."
Origin will release its half-year results on February 15.