How on earth did they come up with that?5 Oct 2020 16:03
Given the deal falling through I thought I would take some time to refresh exactly why I invested in DELT and to try to work out how on earth IOG managed to value DELTs non cash assets at £2m.
Looking at the core, SNS Gas exploration assets, which were IOGs real reason for bidding there is:
The Pensacola prospect, to be drilled with Shell in H2 2021, which could contain upto 982 BCF of gas with an estimated gross P50 recoverable resource of 309 BCF.
The Sellene prospect, to be drilled with Shell in 2022 which may contain upto 1,021 BCF of gas with an estimated gross P50 resource of 629 BCF.
The Cadence prospect, which is drill ready, with the potential to immediately introduce a partner and fast-track towards drilling, which may contain upto 1, 333 BCF of gas with an estimated gross P50 resource of 597 BCF.
The Cordova prospect, which may contain upto 329 BCF of gas initially in place with an estimated gross P50 resource of 124 BCF.
Ther Cupertino lead, which DELT is actively looking to attract funding and / or operating partner for, which may contain upto 3,003 BCF of gas with an estimated gross P50 resource of 820 BCF.
The Cortez, Cortez South and Burbank leads, which combined may contain upto 1,732 BCF of gas, with an estimated gross P50 resource of 638 BCF.
Then there are the smaller assets, Faihaven, Lytham, Blackadder, Teviot, Sloop, Endymiom, rig and jib and Williamson.
Looking at the non core, CNS oil exploration assets, which, although IOG had no real interest in, there is:
The Dewar Prospect which DELT is actively looking to attract a funding and / or operating partner for with upto 80.5 mmbbls and gross P50 resources of 39.5 mmbbls of oil.
Then there is the other smaller assets of Manhattan, Oxnard, Malibu, Newport, Brora and moonstone.
My conclusion?
With all these assets, which are strategically placed around established tier 1 and tier 2 operators, Shell, INEOS and Spirt in the SNS and BP and Repsol in CNS, who will need to grow their resource base through acquisitions and farmins, not licencing, my original investment decison for DELT is still sound.
How did IOG come up with their £2m valuation?
I can only assume they bid what they could afford not what they thought DELT was worth. Because if they think that all those assets, proven or not, are worth £2m they are in the wrong game.
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