Fundamental Valuation16 Sep 2018 11:25
For those amongst you not keeping up with the posts from ADVFN, I thought it might be helpful to share the below with you as well. Apologies for the repetition if you've already read it.
I felt it would be appropriate for me to chime in and remind everyone of the fundamentals that drive BLVN's valuation. I am seeing figures and numbers thrown around, but without any basis to back them up.
There is a general agreement amongst analysts that the the existing (unrisked) resource base is worth c. $170-190mn. Let's take the lower end of that range and consider it in the context of the development options available (i.e. standalone FLNG, offtake to Hilli, Bioko, etc). In my view, I am comfortable placing a 75% chance of the project proceeding with what we already have in the ground (you can adjust that probability as you like, point is it's not zero probability). That then gets me a risked value of the existing resource of $127.5mn. I then take the $25mn cash at FID and risk it by same probability, netting me $18.75mn. Finally, we have another $80mn of cash on the balance sheet, resulting in a total NAV of $225-230 vs a market cap of $140mn. By my math, that's an upside of 60-65% from current stock price.
Although IM-6 did not establish as much additional resource as hoped, the drilling program represents a critical step towards the development of Etinde. I am confident that we'll have FID eventually, not a question of if but when in my view.