RE: 100bagger ?27 Jul 2021 20:06
Assuming 6 bcf discovery (massive assumption), I have done an NPV calculation making some educated guesses on Capex and Opex in the years 2022-2035. Assume first gas in 2024. Assuming a gas price of $200/mcf increasing at 2% inflation. With production ramping up to 2000 mcf/d from 2025. (I have capped it to 15 years as you would produce the 6bcf by then).
Over this 15 year period, this would give:
Gross Revenue ($MM MOD) $1.2 Billion
Net Cash Flow ($MM, MOD) $850 Million
Assuming a Discount Factor of 12%, this gives a discounted NCF / NPV 10 of c. $324 mm
Which works out at $52 NPV/mcf and an IRR of 50+%.
Taking this NPV and applying it to Tai to calculate the Net Asset Value (NAV)...
- 6,000,000,000 gross cubic feet
- 5,040,000,000 net cubic feet (84% working interest)
- $263,500,000 unrisked value
- $67,000,000 risked value (30% geological chance of success and an 85% commercial chance of success if a discovery)
- 8p / share risked for Tai
- 31p / share unrisked for Tai.
So in conclusion, a modest discovery equates to an approximate doubling of the share price. The analysts assessments are sensible.