RE: Hey DPD and seagull23 Aug 2021 13:59
Spudton
good challenge indeed, it made me look back at the Tennyson paper publish in Apr 21:
https://www.advanceplc.com/media/1081/210420_recipe-for-success-2.pdf
confusing enough if we just take this bit:
"We value barrels in the ground at US$12.2/bbl, implying net unrisked value of US$209m (12.6p/shr). After accounting for corporate adjustments and project risks (factoring in future dilution etc.) this leads to a risked Total NAV of 8.0p/shr –
over 3x the current share price. "
Reading further especially page 7:
Based on a flat oil price assumption of US$60/bbl, during the first full year our model suggests gross annual cash flow of c.US$375m net to the contractors (US$187m net to 50% interest). Due to its exceptional reservoir productivity, the field cash flows decline relatively sharply, with all c.US$840m of project cash flow recovered over a five-year period (see contractor cash flow profile in Figure 7). This results in an impressive project IRR of 106%, with gross NPV10 of US$418m (US$12.2/bbl). At 50% interest, this is worth c.US$209m unrisked, or 12.6p/shr net to Advance. Our NPV includes a geological risking of 95% as well as a commercial risking of 50% predominantly to account for future dilution in raising the US$35-40m of equity to finance the full development. After accounting for cash, and proceeds from the exercising of near money options and warrants, we calculate a risked Total NAV of US$132m, or 8p/shr.
so the 8-12.6p is target sp post production (based on re-reading) taking into account the two risking factor (including money/ commercial at 50% on top of geological risk which is minimal).
Thanks again for the challenge, much appreciated.
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