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Very difficult to given valuation in the absence of third party numbers. However, from the PB interviews, Cascadure is few 100's BCF of gas (let's say 200-300 BCF) and then Chinook-1 structure is 3-4 size bigger than Cascadure, which means that Chinook-1 has the potential over 1 TCF of recoverable gas. Chances of success for Chinook-1 is considerably increased from 34% to 50% amid successful Cascadure well result.
I am looking forward to chinook-1 drill and any commercial discovery will be indeed game-changer. I will be hoping for market cap of around £150-200m on Chinook-1 success subject to macroeconomic factors such as coronavirus, stock market condition, oil/gas market etc.
On the size of Cascadura. We do not have a management estimate for it's total size. Paul Baay has mentioned the size of Cascadura could be 100s of BCF in interviews. However he hasn't provided a specific number range, and likely wont until a 3rd party reserve elevator provides that analysis. In comparison to Coho, 100 BCF would be equal to 16,666 Mboe. So every 100 BCF would be equal to ~5x the size of Coho. From TXP's news releases they mention that Coho could produce between 1,667 - 2,000 boe/d where as Cascadura could produce between 7,750 - 9,700 boe/d. Additionally TXP has mentioned that there may be multiple wells to drill at Cascadura, however we do not know how many at this time. Essentially the big question that remains unanswered at this time is how big is Cascadura?
As far as the world changing, I am not sure a whole lot is different in Trinidad. They are a large exporter of natural gas products and will continue to be in the future. What has changed world wide are oil prices due to Saudi and Russia fighting on oil price. Which thankfully haven't had much of an impact on natural gas prices as far as I am aware.
As far as why TXP is trading at this level my only speculation would be that the greater market disruption is having an impact on their share price. When investors think the sky is falling sometimes perception trumps reality. Fundamentally I like TXP a lot.
Thanks Moric, I think I am managing to get my head round some of the reports...
“Coho was assigned gross working interest 1P reserves of 1,148 Mboe and gross working interest 2P reserves of 3,349 Mboe with a 2P NPV10 of $27.5 million before taxes.”
So Cascadura X2 bigger?
Then the other sites.
What is reassuring for me is that the private placement will have included those with real knowledge of the risk/benefit and they where happy to buy in at a discount 38p only 5weeks ago.
Or has the world really changed that much?
Woops left an extra sentence in there at the end. Please ignore lol.
Hey Tobin,
The purpose of oil and gas companies providing reserve reports it to give investors a measure for the company's NPV10 on a clearly defined resource that have a limited life. They are intended to help investors/management evaluate the value of their commodity production. Banks use these reserve reports to lend to oil and gas companies. This past March 26th, 2020, TXP reported their updated reserve report for year end 2019 that included the Coho well estimate for reserves . The production decline curve that generates the reserve estimate also provides the company with increased NPV10% value.
Cascadura reported it's production tests in the new year end were not included in the updated year end 2019 results. It is however possible using the initial production rates from the well test to estimate a decline production curve. Using a commodity price deck and some assumptions around cost it is then possible to generate what an NPV10% might look like for Cascadura.
Similar to TXP recieving reserves for their coho well this year when they reported on March 26th,
Thanks Moric, not sure you can use NPV10 to price a company with a clearly defined resource that may have a limited life span. As I understand it is the production discharge curve that is important which is usually assessed on similar well production. Thoughts?
Tobin,
Are you familiar with the Net Present Value (NPV) Before Tax (BT) 10% discount rate calculation?
I would be curious to hear your thoughts on this previous post:
https://stockhouse.com/companies/bullboard?symbol=t.txp&postid=30835977
Thanks for the link to the Healy Energy review. I suspect Cannonball project is quite a bit different from Cascadura as it was offshore. It's stupid expensive to operate off shore platforms, such that you want to product all your BOE as quickly and consistently as possible. That and the initial wells can cost north of $40 million.
Best,
Moric
2wells at 40 million cf/d EACH..
TXP looks like it is seriously undervalued but how much. This isnt an area I have much expertise in but I want to put down a few numbers so if someone can tell me is I am wrong.
The main resource we know of and is reasonably assessed is Cascadura. And PB has stated that initial production rate would be 40-60million cf/day,
https://www.*************.net/touchstone-exploration-ceo-excited-by-flow-rates-at-cascadura/
and that to drain it over 15-20years would require 1 or 2 further wells.
Also he has stated the price of NG locally is more than $3/1000 cf.
So initial revenue with 2 wells, and 40 million cf/d would be $240,000/day.
But rate rapidly falls. How much can we reasonably expect ?
I attach a paper from the Cannonball West field, and it looked like the field was drained with 3 wells over 5 years. Average flow half the initial.
Assuming similar .. is that reasonable?? .. then total revenue maybe $120,000/d x 1800days = $200 million.
Chinook maybe bigger, but maybe 50/50 chance of success from PBs comments.
and then there is Royston.
This is revenue and not profits, not included condensate, or existing production. But does look like this company should be valued at several times the cf $60 million it is today.
Anyone else want to question or refine this numbers?
Especially profit??
https://www.healyenergy.com/wp-content/uploads/2012/12/SPE-110524-PP.pdf