REPEAT+ valuation if arwon has 5 mill barrels (p2) + Posted...

REPEAT

+ valuation if arwon has 5 mill barrels (p2) +
Posted 20/10/04 14:22 - 85 reads
Posted by stolwyk
Post #395018 - start of thread - splitview

REPEAT

The exercise was done in 2 parts:

Part 1: The first post of:
http://www.hotcopper.com.au/post_thread.asp?fid=1&tid=130569#371005

The revenue per barrel was set at $A60 ($US43.65/barrel (0.7267)

I then proceeded to allocate a higher cost/barrel:
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Subject re: + valuation if arwon has 5 mill barrels (p2) +
Posted 21/09/04 09:09 - 73 reads
Posted by stolwyk
Post #371005 - in reply to msg. #370824 - splitview

When these calculations were done, I allocated the same costs to some of the wells done last year as those to be done this year.

Ideally, the 3.1 mill reserve should have a cost of $33.93 ($2003 year cost as per Sept. Presentation).

I did use $26 for 2004 's costs due to a very large component of barrels from just the Awon well (eg. it costs just as much to drill a hole to find 1 mill barrels as it does to find $5 mill barrels) and of course the total year's barrels will be much greater than last year's 3.1 mill., if ARWON is successful.

However, I am prepared to use $30 costs/barrel to include the 3.1 mill reserve as well, so the costs of the 7.54 mil barrels becomes $226.20 mill to deduct from revenue ($452.40)=$226.20! mill before tax.

Tax at 20% is $45.24 to deduct from net revenue or $226.20= $180.96 mill or $2.89. That is if this oil were immediately converted into cash.

It won't be, therefore allocate 67% or $1.93/share.

To this must be added:
1. The remaining assets above ground.
2. The value of the Gas. Sofar, STU has not included this but according to Tasgarta, it will become important once sale agreements are in place.
NB: More wells are to be drilled this financial year but have not been included. (Note the calender for drilling is from Jan/Dec, but the financial year runs to 30 June.
This needs a premium IMHO).
3. The high quality of Management (Their 67% strike is the highest in the Cooper Basin).

So, all up, I consider a share price of $2.20 after a successful discovery of ARWON, a reasonable proposition. I am not suggesting this will occur.

Gerry
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