I think it’s a bit optimistic though and would reference two other companies with proven reserves 1) Xel – with 257 (2P) oil in north sea – valued at £200m 2) RKH – 293m barrels from phase 1 sea lion – they have 40% (120m) and are valued at £279m (but with @$260m cash)
There are a couple of mid-term (3months – 2years) drivers though
1) If BOR can get a farm in and source a rig 2) If FOGL and partners drill one of the large condensate prospects and strike
I think 1) is a huge risk if they drilled – would it be Darwin or another prospect? 2) is lower risk but a duster could kill BOR if they did not have a drill lined up.
Both combined would give some comfort, my reservation on 1) and indeed 2) is that having attended the Bowleven investor day Kevin Hart stated he had never seen such a tough environment to get funding for drills and farm outs
I have not looked at the Falklands for a while but is there a timeline for FOGL and partners to declare the drill targets?
My current view is FOGL and Rockhopper look much more appealing than BOR, which in turn is WAY more appealing than Argos
I like were your heads at SpeedKing, your numbers pretty much confirm my 9 year expectation.... Your present valuation is close enough for me ! The best part is that your reasoned sp doesn't include any other discoveries, and I would be surprised if BOR don't pull any more rabbits out of the hat !!! I'd be happy with £5 a share but add a pinch of oil, a touch of gas and 2 or 3 FPSO's and the word "multibag" doesn't really do it justice :)
Well their website states 2013 preliminary results due April 2014, so im expecting that they will lump all information in to 1 RNS as BOR dont seem liek the type of company to issue one for every small detail.
Would be nice for the results to contain some information on the 3d seismic data, and any farm in news.
Valuation for Darwin alone (excluding other prospects): 210m barrels (mid case estimate) x $95 per barrel = $19.95 bn less 20% CAPEX estimate i.e. minus $4 bn = $15.95 bn less 60% Farm-In dilution i.e. minus $9.6 bn = $ 6.35 bn less 15% taxes i.e minus -$0.95 bn = $ 5.40 bn Convert to sterling i.e. x 0.60 = £ 3.24 bn / 484,098,404 shares in issue = £ 6.70 per share
I'll let someone else determine the level of risk to factor in and the PV calculation to today's terms.
But leaving the PV calculation aside, with a current share price of 13p, I'd say the shares are trading at somewhat of a discount given 13p divides into 670p circa 51 times!
I admire your optimism Mr Bond, I think your time line is possibly a little bit squeaky but god knows I would love to have £500K in the bank courtesy of BOR in 18 months !!! I have always said that BOR is a long hold for me, looking at another 9 years. Then I'll be 50 and very hopefully £5+ by then.... It only takes a good farm in partnership and another successful find with a move to production. Now that is absolutely achievable in 9 years !
We have been well over £1 before and it will happen again soon enough, next time I see a profit I won't let it drop below my break even. I was caught with my pants down last time ! Spent quite a bit of cash averaging down from 38p though, so at least I'm closer to a reasonable break even. The magic words are "stop loss", lol
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