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Thanks all fore the insights. Interesting ont he PMO purchase from BP.... We'll just have to find the oily stuff and see what transpires.....
Calculating intrinsic value is quite or very complicated depending on who you ask.
For a relatively easy to understand guide anyone who is interested you may find this link (if it lets me post it) useful
corporatefinanceinstitute.com/resources/knowledge/valuation/intrinsic-value-guide/
it is true,
thats one of the many possibles either piecemeal or as a single entity.
they might get the drill stuck!
Neverlearn,
That is the $64m question, but common consensus suggests that we would be looking at $3 - $4 dollars per barrel to sell up - however ultimately it will be down to whatever deal we can get.....
But just think ... We don't have to look far, in Jan PMO bought from BP
"British oil giant BP has sold several oil fields in the North Sea for 625 million dollars (£475 million) as major players continue to exit the dwindling basin, handing over to smaller producers.
Premier Oil, a London listed company, said it was buying the Andrew Area and Shearwater sites from BP, hoping to capture the 82 million barrels of oil and equivalents, thought to still be trapped under the ground.
The Andrew Area includes five oil fields, with a stake of between 50% and 100% in each, Premier said. It also includes a 25% interest in the Shearwater infrastructure hub.
68.46 dollars The cost of a barrel of Brent crude oil"
So if we can proove up 480m barrels -- roughly 6 + times what BP sold for £475m then 6 x 475m could just be a good idea of what area A of the conventional could be worth... What might area B & Area C be worth ?
Yet alone Yukon 90m barrels ( £ 475m) and then unconventional @ 2 -3 Bn barrels ? Mind blowing ?
Definitely SP will be many multiples of where we are now .. Some of the comments of selling the entire Company for 10p a share are ludicrously low in my opinion.
This Company with the assets that DW has built up has the potential to mirror Cove Energy , we just need to proove the oil up.
I don't view this as ramping ! Just realism, I don't believe that any Oil Company has hit Commercial oil with their first drill, our 3 drills have provided information , hopefully this is the one to say goodbye to the naysayers and trolls...
GLA
BB32
This is actually fairly simple to value. They will sell the oil in the ground for $3+ a barrel.... then it is is not their problem..... $3 x 480M... minus costs.
"More importantly there is also enough profit overhead to want to explore options at a time when a lot of other are not."
read badly. To go exploring for oil is what I meant. The profit overhead to explorer other options when they find it is another matter. 88e needs that big partner. Whatever happens after it needs that.
Thought about this on COCS and the "duster" comments few days ago where CCOS and what is a "duster" changes with price of oil.
As its sort of the same question.
Ultimately. PMO are very happy with the numbers. There is enough profit room for them to want to be there.
More importantly there is also enough profit overhead to want to explore options at a time when a lot of other are not.
I was just sitting here watching the slowly stepping SP and got to thinking, so looking for any ideas on this, as we don't seem to know...
Assuming we hit beautiful sweet oil, and we indeed have 480mill extractable barrels as estimated, and it flows commercially etc etc (big ask, I know), what does that mean ?
On avergae the cost of extraction is around $30 -$40/bbl (we've already paid for our rig and drill through numerous CR's, I assume, so hopefully less)
So if POO is $60 say, will the SP be reflective of all that oil up front (i.e 480 mill x $30 profit per bbl / 6 bill shares = $2.40) or will it rise as the oil is flow-measured going into the TAPS (which could takes 100's of years at a few 1000 bbls a day production to empty the well/s).
All a bit confusing trying to work out a very rough intrinsic future value on these shares (i know a lot of it is 'what the market decides/ sentiment etc. but there must be some formula that takes the time into account : 1.6 billion barrels will take hindreds of years, and by then oil will be extinct as a fuel if the polar bears get their way)
Sorry, just daydreaming, but I thought it's an interesting little story problem. Maybe historical data from other wells in similiar positions might be useful, but most seem to be about the buyout price after a successful flow test (Cove Energy etc).
Hmm. Anyone got some handy data on this type of theoretical valuation (all assuming we don't end up covered in dust) , or is it just a case of wait and see what the market decides....?