upto 500bopd ! monster news !, page-45

I've done a couple more back of the envelope calcs, incorporating the assumption that the Govt 50% take is based on profit net of tax credits. Under the following assumptions: 85 bbl per day, $20 opex, 30% tax rate, tax credits of $2.7m AUD, total field size of 287,000 barrels unimproved; depletion of reserves would take about 9 years, and tax credits would be used up in about 2.5 years. Assuming that after using up the tax credits the UK Govt takes 50% of profit (after corporate tax), I get an NPV of $4.1m AUD @10% discount rate and POO of $60 USD. This is about what Key paid Midmar.

Notably, the value increases to $4.9m AUD @ POO of $70 USD (which is where we are currently), or $5.6 AUD at $80 USD.

The critical thing with the workover is the size of the new reserves. If flow rate increases with no increase in reserves this will have negligible impact on NPV (since the reserves would be depleted quickly). On the other hand, if there is an increase in reserves to a potential 826,000 as hoped by Key (Brockham and Lidsey combined), then flow rate matters due to the time value of money. With this larger reserve number, at 85 bbl per day NPV is about $7m AUD, $11m AUD @ 200 bbl per day, or $13m AUD @ 500 bbl per day. By my calcs looks like about 10c per share is the unrealised potential. Mind you, anything between 3c and 10c would do me fine !!

As stated many times already, re-rating will ultimately come from Nyuni.