Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
-- BB --
Despite the lack of progress over the years and that I'd bottom drawered these, I'm thinking top up on this sudden movement in sp.
This is after me thinking I'm not putting a penny more in lbe 🤷♂️🤷♂️🤷♂️
Doesn't take much volume to move price here.
The obvious question is why this is suddenly motoring now?
News leaked of incoming deal?
Nothing to do with leaks imo but the fact of the assets it has added as well as the super deal with Japex in Norway and that investors are waking up to it. It is and was very oversold plus the the low available free float which i highlighted.
The M/cap at 25p is £14m m/cap and is a producer on it's existing assets which will soon have paid for itself as well as expecting to double production on those.
It has $100m of available Japex funding for acquisitions in Norway. Use some of that for Norwegian production acquisitions (expected) and will further transform the company.
It has also underestimated play opening discoveries in Norway with major partners.
It has a world class exploration block off Sarawak with multiple large prospects.
The block has 6,000 km2 3D seismic which would cost a fortune to replicate and at least $20m - or more than the current m/cap.
Kertang is a world class 1.5 billion boe recoverable estimate (9 TCF) drill ready prospect DHIs, gas cloud, significant methane measurements.
Two smaller adjacent prospects about half the size each may add 6 TCF to this so imo a target potential of 15 TCF.
Those 3 are covered by 2900 km2 3D.
Farming down from 52.5% to 15-20 % could yield $ 1billion of value.
57m now or expanded to 100m shares at £4 = £400m/$500m
With still further structures.
Also intending to pick up producing assets in that region seperate to Norway.
By comparrison - Upland (UPL) in the same Malaysian region, no production, financial backing, no 3D and unknown stake in a PSC block not even awarded yet, no recoverable estimates and nothing else of value on 1.2 billion shares and todays share price of 3.3p (recently 4 and 5p) = £40m m/cap and nothing else to underpin an entry price.
Fair starting value for LBE would and should be 40p which is only £22.5m and on the above looking for north of 100p from Norway in growth (ie barely £60m) and a potential future target as above of value on a success case on Kertang detailed above.
All the below plus free carries on drills off Norway starting in 6 months. And a possible extension of the carmen discovery off Norway in the block adjacent. Plus Carmen possibly leaks over to our block.
Mental value to be had if you see the wood through the trees
@zengas : excellent summary of potential here. A reminder why I am invested. My comment was more rhetorical question why the share price suddenly moving now. Would agree that 40p a fair price based on progress to date (Japex deal, Stratford production, Norwegian discoveries and Malaysian potential)
If anyone hasn't studied the latest Block 2A presentation - the Kertang 9 tcf mid case recoverable prospect is described as an undrilled giant and on slide 5 it is compared as analogous to Lang Lebah 5 TCF and Kasawari 6TCF. LBE include the reference to Lang Lebah - "Unravelling an abandoned giant" by Aquilah (Amir Jamalullail and others- The leading edge 2020)
https://longboatenergy.com/wp-content/uploads/2024/01/Malaysia-license-SK2A-extract-from-EAGE-presentation-January-2024.pdf
Yet in that article, Lang Lebah lay dormant for 25 years after initial drilling and it was only in 2016 that new 3D seismic and reprocessing was carried out and a new well drilled that made Lang Lebah one of the largest gas discoveries of 2019
https://www.researchgate.net/publication/343411866_Unravelling_an_abandoned_giant_in_Central_Luconia_Province_offshore_Sarawak_Malaysia_-_Success_story_of_Lang_Lebah
"Lang Lebah, located in block SK410B in the South China Sea, is one of the biggest gas discoveries off the Malaysian coast.
The Lang Lebah field is estimated to hold five trillion cubic feet (Tcf) of gas in place.
The field was discovered by the Lang Lebah-1RDR2 exploration well, drilled in March 2019 to a total depth of 3,810m. The discovery well encountered 252m of net gas pay in the Middle Miocene carbonate reservoir.
The Lang Lebah-2 appraisal well, drilled in January 2021, confirmed Lang Lebah as one of the biggest gas discoveries in the region. Drilled to a total depth of 4,320m, the appraisal well encountered more than 600m of proven net gas pay in the carbonate reservoir. The well test demonstrated a flow rate of 50 million cubic feet (Mcf) of non-associated gas a day. The Lang Lebah field is expected to come on stream in 2027 and will produce up to one billion cubic feet (Bcf) of gas per day." (165,000 boepd)
https://www.offshore-technology.com/projects/lang-lebah-field-development-sk410b-malaysia/?cf-view
Kasawari - "Discovered in 2011 offshore the Malaysian state of Sarawak, the Kasawari sour gas field is today a symbol of Southeast Asia’s energy challenge.
Petronas is eyeing next year for first gas. By 2025 it hopes to see 900 MMscf/D (150,000 boepd) flowing from the field to its sprawling Bintulu LNG export facility on the Sarawak coast.
The scale of Kasawari, found at a water depth of about 108 m (350 ft), is a result of its ranking as one of the most CO2-laden gas fields planned for development globally. When wells are flowing, it’s expected that up to 40% of what will come out will be CO2.
New research from Rystad Energy suggests that the capital inputs required to add CCS to Kasawari will hike the project’s breakeven gas prices from roughly $3.50/Mcf to more than $5.00/Mcf. "
https://jpt.spe.org/what-you-should-know-about-offshore-and-sour-gas-ccs-high-cost-leak-mitigation-and-transportation
To follow on from the previous post -
Finally and a crucial point - is the very low CO2 potential at LBEs Kertang which they have highlighted for a reason (Take this in context of Kasawari costs and very high CO2 for getting shot of it (see above) which amounts to near 40% of the gas)
From the LBE presentation again -
* Kertang approx 8-10 TCF (CPR 2019), giant size prospect, updated CPR underway to reflect more technical work, over 200 sq km in areal extent at MMU closure
* Gas clouds very evident (& similar to Kasawari gas cloud), amplitude brights at multiple levels
* Geochemical analysis of sea floor sediments over prospect shows high Methane concentrations & very low CO2 (Fugro 2019)
-----------------------
So with Rystads Energy $3.50 - $5 mcf break-even for Kasawari - that's $21 - $30 per boe break-even (see article above).
My estimate is a $3 per boe valuation to LBE. With a potential 9 TCF recoverable that's 1.5 billion boe.
Retaining 15 - 20% on farm out is some 225 - 300 mmboe or $675m/£500m - $900m/£700m potential target value divided by the current 57m shares or expanded out to 100m re share price potential from Kertang alone - yet has potentially 50% more gas upside from at least 2 other prospects with further 'multiple large prospects' all compared to £14m m/cap now (24p).
This to me is imo more than underpinned by the Norwegian growing production, existing undeveloped discoveries and $100m available financing from Japex for further Norwegian production assets which should trigger further share price growth. Imo/dyor as ever.