So for now, the main game in town for MOG is a waiting one....

So for now, the main game in town for MOG is a waiting one. Waiting for Artemis-1 to be scheduled and drilled.

Lets look at the score board.

PRE DRILL and PRESENT:
Artemis E/V @ 16% and 32% GCoS = $1.2-2.4B (thx Ya)
Net revenue on 12 TCF = $90B AUD @$7.5/GJ - The kind of resource that would support a 8.5mtpa plant over 20 years.

MEO Market capitalisation = $207m, $125m E/V less consolidated cash of $82m (39m current + 43m in AUD payments from Petrobras - USD assume @ 0.93)

well committment = $0

$125m E/V for MEO is a combination of the NT/68 development options that are now more likely with more cash, however in my opinion it is still primarily for Artemis, lets assume 60%.

$125m*0.6 = $75m.

risked upside from Artemis = $240m to 480m

upside on current E/V = 320 to 640%


MOG Market capitalisation = $32m, All E/V

well committment = $0.

risked E/V = $360m

On an equivalent basis with MEOs 20% holding, MOG E/V = $56m.

upside relative to MEO current E/V= 56/32 = 175%

upside against risked Artemis = 360/32 = 560 to 1125%




POST DRILL - SUCCESS @ 12TCF
Artemis E/V = $7.5B
MOG E/V = 0.15*7.5 = $1.12B

MOG well development costs from 70%@62mUSD per drill
$13.3mUSD per well or a round $15m AUD.

$30m for each drill and nothing over drill cap assumed.

E/V to well commitment ratio is 15/1120 1.3%, insignificant.

value per share = 1090/161 = $6.77/sh.

% on current share price = 3760%


naturally you can expect any cap raising dillution to weigh heavily on this as well as the rather intensive costs of footing the bill for LNG capex (or low sales value to LNG to avoid this) as well as field development costs - but it does give you a flavour of the currency that MOG may have to play with to achieve something substantial for holders.


MEO E/V = 0.2*7.5 = $1.5B with cash bonus of $34mAUD
assuming nil cash spend and doubling of the E/V on NT/68 to $100m MEO net position is 34+82+100+1500 = $1716m

value per share = 1716/219 = $7.83

% from current price = 7.83/0.47= 1660%




POST DRILL - FAILURE

MOG - possible further drilling @ 15% expense

#it is in this instance that MOG really suffers and the downside exists as with nil assumed cash and nil associated E/V MOG could be dead unless a game is generated in the interim. for this reason it might make sense for MOG to seek some capital in the lead up to the drill to derisk itself from finding cash after the spud for further drills should petrobras decide to move for another well.


MEO - possible further drilling @ 20% expense
looking at MEO on an Artemis fail, there is a much safer case if we consider using the same numbers as a success.

MEO remaining E/V = $100m (NT68) cash position of $82mAUD

Share price underpinned value at (82+100)/219 = 0.83

#so in the interim, MEO had better work pretty hard at generating any joint venture in the timor sea to build a case for them to carry through and support value creation in the company. make methanol while the sun shines they say :)

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Now before I say anything else, you might jump on me for suggesting that MOG is better or worth more than MEO. This is not my point. From my perspective, Artemis is or isnt a success;

When you consider the size of the gas resource at a mean 12TCF with LNG development options, what is the cost of a few wells etc.. when you hold 15%

Considering that MOG does have some pretty hefty downside, I have split between MOG and MEO, but by far MOG is the better catapult for value in Artemis. The downside has certainly been factored in though.

with cornea and braveheart out of the way, third times a charm :)

All just my extremely unqualified and speculative opinion. DYOR.

cheers,

SF