Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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otd - 22.5% ownership/accountability of FOG has been taken into account throughout. 98% vs 100% ownership of Falcon Australia is irrelevant, the other numbers are rounded, and the assumption are so wide ranging.
I would prefer to see a net gas price figure (eg net profit per mmCF, rather than a net profit per boe). I have no idea of the net profit margin received by the operator, nor of the likely gas price forecast for the next 30 years. If anyone has independent and professionally-generated numbers, let me know and I will drop them into the calculation and report back. Whatever, this is just a wet finger held up to the wind, which is still better than nothing.
Thank you both! Have been wanting to refine my onboard calc. One thing missing in both is 22.5x. 98% (Falcons ownership in Falcon Australia .
Td. Oils you could site the 3.75 usd per well?
Hoping If gas prices rise in the short term we’ll get more interest in the sale.
Heard to hoping for more the. .5 lol
tnb - Thanks very much for this. When I first bought FOG many years ago, I attempted an NPV calculation, and came to the conclusion the shares were a steal. After several years of delay and frustration, this conclusion should be re-visited, unfortunately I have mislaid my original calculations.
Please help me out - I can not see how you have derived your end number. I am happy with the value of US$ 61.6Bn, this is the value of the recoverable resource attributable to FOG. You then seemed to have just divided the number by 10, unfortunately this is not how a discount rate is applied to cash flow in order to obtain an NPV.
For the big picture, if I take the
* $61.6Bn total FOG attributable recoverable resource value
* assume production starts in Year 4, and continues for 30 years at a fixed annual income amount of $2053 M (61.6/30)
* total infrastructure costs of Year 1 $500M, Year 2 $1Bn, Year 3 $1Bn, of which 22.5% attributable to FOG
* drop into NPV/IRR spreadsheet with a 10% discount rate
* gives NPV10 $15.6Bn
* IRR 143% (!!!).
* 985M shares in issue = $15.80 per share = £11.56 at GBP:USD 1.37.
In reality, projects at this stage are typically valued by the market at a fraction of their NPV, to take into account all the things that can and frequently do go wrong. Future political risk is an obvious overlay here to the normal geological and engineering risks. I have assumed 25% of value, which is pretty standard for a project still at discovery, so maybe £3 per share is a realistic valuation in a few months time, once we have a a more solid idea of gas flows and thus economic viability.
So why the sub-10p valuation? Of course this is based upon the 6.6 TCF total / 1.46TCF attributable to FOG. Let's use the same assumptions, but with lower infrastructure cost - total $1Bn, $225M to FOG, Year 1 $25M, Years 2 & 3 $100M. Value of gas/year drops to $182.5M. NPV10 is then $1.52 Bn, IRR is a very respectable 57%. Share price is US$ 1.54 / £ 1.12p, then apply your market risk discount fraction - if 25% as above, that gives 28p / share.
However, it is important to point out that there are some very big assumptions here, not least the gas price and whether there will still be a demand for gas in 2054! I am a geologist (but not O & G) and not an accountant, so other commenters please provide your more knowledgeable input!
Whatever (reasonable) assumptions you make, at the current 6.6TCF the shares are still very undervalued. Once (or should I say if) the surrounding companies' wells show commercial rates, and we are able to validate the Amungee flow to Origen's rather than POQ's standards, then the market will start to realise that 465TCF or more starts to look plausible.
My conclusion: Don't sell.
Tnbird,
Thank you kindly for your valued input, as always. Many, many posters on here have no clue of the history or the magnitude of the play here and are happy to say the value of Falcon is $.50.
LMFAO.
NPV-10 (Industry Standard Resource Valuation)
• 465TCF (Projected across all horizons as basis) Note: Probably Higher, figures used here well below 2015 February Gross Estimate Base across 4.6 million Gross Acres (Basis in 2015 was 496 TCF with various resources predicting more than 500 TCF with a 16% recovery factor)
• @16% Recoverable = 72.96 TCF (Conservation Base per Origin and Falcon February 2015)
• 22.5% Net Falcon or 16.416 TCF Net Falcon (Now)
• 16.416 TCF / 1000 BBoE or 16,416,000,000 BBoE Net FOG X well head estimated value of $3.75 (US) = $61,560,000,000 over life of the project or typical base of 30 years…..not considering unknown depletion rates so this is variable
• $61,560,000,000 NPV 10 applicable valuation rating or $6,156,000,000.00. NPV-10 takes into consideration cost to surface resource …..infrastructure etc.
• $6,156,000,000.00 / 981,487,425 shares issued not including options = $6.27/share could be a realistic value for future sale based on available industry standard calculation methods. Common sense (if applied) in the business world could imply that we should see any where from $3 to $5 US per share in a future sale when looking at the entirety of 4.6 Million Acres……..could be lower could be higher…..but this model of NPV-10 provides a reasonable base for comparison of possibility when looking at the entirety of the 4.6 million acres.
Applicable:
Amungee Only 2C Knowns Falcon Net NPV-10
• Middle Velkerri B Shale Pool 2C Contingent Gas Resource Estimates within EP76, EP98 and EP117 as of 2015 February as known basis.
• 1.46 TCF Net Attributable Falcon
• 1.46 TCF …….1.46 TCF / 1000BBoE = 1,460,000,000 equivalent x $3.75US well head surface value or $5,475,000,000 US considering NPV-10 current value based on known 2C based on Amungee applicable to existing permits per February 2015
• Current value using Amungee only applicable across identified permits per February 2015 basis our present value should be $547,500,000 US / 981,487,425 shares issued not including options or roughly $0.56 US per share....present value view
Summary: Granted…commercial prove up will be crucial to these numbers being real but one can see the huge potential that rest within Falcon as Origin and our neighbors Santos, Empire, etc. move forward