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Based on the last discussion in my last post I have made the decision to keep buying to $2.00 US and then reassess there. Am I wrong?
One Coho development well is scheduled. That is the plan - two producing wells from a small field. But think about Coho, a small field that is almost left out of the discussion (and future revenue projections) because it is so tiny next to Cascadura (and also next to Royston though that not fully tested).
Coho with two wells will be producing DOUBLE the current production of the entire company. And it is a blip. I have never been in a situation where discovery of new field that will immediately triple overall production of the company is hardly even noteworthy, given the enormity of newer much larger discoveries, one of which (cascadura) will begin production only a few months later at a scale of 5 Cohos and will add 2-3 Cohos with each of the planned 6 development wells. With Royston we cannot even begin to think of the possible scale. If it is really twice the size of Cascadura then it is possibly 40 Cohos.
It is all a little unbelievable. Coho triples size of company from 1400 boed. And the next two discoveries are 20 and then 40 times bigger. And we are very early in the whole process and exploring the Ortoire block and developing current and future discoveries. At US $1.40 TXP is still insanely cheap. I think it is still by far the most undervalued issue that I own.
Indeed, and you can probably double my calcs if Royston happens to flow economically (I included nothing for production there).
And if Chinook can be hooked up in 2023, or any of the other prospects hit hydrocarbons then there is plenty more upside to go on that too. Didn't add anything for Coho either, which could have a couple of additional development wells.
One thing is certain, once Cascadura is hooked up, revenues and profits will jump. 2023 will be a good year.
Let's look at the Fincapp report, then..
Their 2022 figures assume:
1) Cascadura 1 + deep combined 55mmcf/d rate during 2022 (coming on stream mid year)
2) Coho - on stream all year
3) Discount to Brent for legacy oil of 14%
4) Brent price of $60
5) Gas price of $2.3 per mmcf
6) Overall 10,714 BOEPD production for 2022
7) G&A $7.5m
8) Depreciation $6.5m
9) Operating costs $12.3m
10) Corporation tax rate 30%
If we apply the costs above to 10,714 boepd (3.9m boe for the year) we get $3.15 per boepd operating cost, and $1.7 per boepd of depreciation. Total operating cost of $4.85 per boepd (excluding G&A, which is more fixed).
Now, convert to my forecasts..
By END of 2022 we are forecasting a run-rate of 200mmcf/d + 5k NGLS + 2k legacy oil - this is assuming development drilling at Cascadura continues after the initial wells are hooked up to fill pipe capacity?
This equates to 35k boepd from gas + 5k from NGLS + 2k from legacy oil = 42k boepd. Say Brent at $70
Revenue using $2.3 per mmcf/d instead of $2.5:
Gas = $168m x 0.8 txp share = $134m
NGLS = $52.5 x 5k (Brent less 25%) = $96m x 0.8 txp share = $77m
Legacy = $70 x 0.86 (14% discount to Brent as per Fincapp) = $44m (full txp share?)
Total annual revenue = $255m
Cost per boepd = $4.85
42k boepd x $4.85 = $74m
G&A (?) say an increase to $10m?
Total costs = $84m
Net profit before tax $171m
Tax @ 30% = $51m
Profit after tax is $120m
@MJ - my figures account for Heritage 20% - if you review you'll see I did net profit x 0.8.
Re: oil netbacks - instead of working out precisely per barrel what we may achieved I have used 35% of gross revenues as an overall tax + royalty rate as we've been guided. Note this is 35% of revenue, so not a corporation tax on net profits that I have applied.
Make sense?
Operating net back $24.24/bbl for last 6 months. $26.30 for last 3 months.
It’s all on page 3 of latest report with breakdown of royalties and operating costs.
Expect overall output to rise though once work overs in the south west completed.
I have net profit as $54m on 90mmcfd gas, so similar. Not sure on your oil revenue figures though? I thought our netbacks were lower than the Brent spot rate?
TXP 80%
Heritage 20%
But those numbers are so big anyways, it doesn’t really matter. I can accept some rounding errors.
What do we know about the liquids?
1) We've been guided 25% discount to Brent?
2) We've been guided that the ONLY opex for gas production is c$0.05c/mmcf/d, which relates to 'removing' (trasport) the liquids?
3) We have unofficial guidance from the CFO that the company are using an rough estimate for overall tax/royalty rate of c35% of gross revenue (both gas and oil combined)
Does anyone have any more/other info?
We could assume something like:
1) Initial production 90 mmcf/d (gas) + 2k NGLS + 2k legacy oil production =
Gas revs = 90mmcf/d x $2.5 = $82m
NGLS = 2k x $58 @ 25% discount to current price = $42m
Legacy oil = 2k x $77 = $56m
Cost of NGLs = 90mmcf/d x $0.05 = $1.5m
Total net revs = $178.5m
Rough tax guestimate = $178.5m x 35% = $62.5m
Net profit = $116m x 0.8 = $93m
End 2022..
2) Gas revs = 200mmcf/d x $2.5 = $182m
NGLS = 5k x $58 @ 25% discount to current price = $106m
Legacy oil = 2k x $77 = $56m
Cost of NGLs = 200mmcf/d x $0.05 = $3.6m
Total net revs = $340m
Rough tax guestimate = $340m x 35% = $120m
Net profit = $220m x 0.8 = $176m
And maybe with Royston + Chinook sometime 2023 onwards??
3) Gas revs = 400mmcf/d x $2.5 = $365m
NGLS = 10k x $58 @ 25% discount to current price = $212m
Legacy oil = 2k x $77 = $56m
Cost of NGLs = 200mmcf/d x $0.05 = $7.2m
Total net revs = $625m
Rough tax guestimate = $625m x 35% = $220m
Net profit = $405m x 0.8 = $324m
Is this in line with anyone else's guestimates?
Put us on a conservative p/e of 5 to 6 and that would equate to around £3 a share end 2022 and £5 a share end 2023.
This (2023) assumes Royston can be produced at a similar rate to Casca total once fully developed, but offers nothing particularly for Chinook oil production, additional legacy production, nor Krak(k)en/Steelhead, Gaubine etc?