Potential Valuation 202516 Mar 2019 17:28
Whilst we’re waiting for completion of FEED, FID, sanction and Ombrina Mare, all of which I expect to happen this year, I thought it would be interesting to look at the valuation of other producers and see just what we could be worth in 5 years time.
I’m assuming our share of production is at the 32k per day expected (40% of 80k) of phase 1 and that through this and the cash flow generated there is is enough cash flow to develop Phase 2 of Sealion assuming the agreed $337m development carry from Premier for Phase 2.
Once Phase 1 is flowing we’ll have 32k barrels per day attributed to us but with phase 2 running this jumps to around 50k barrels per day.
To give you a comparison valuation, Cairn produces 17k per day and is valued at £1.2bn. If everything sorts itself out there with India analysts have pencilled in a valuation of around $2bn plus assuming it gets to produce 50k per day.
So imagine us producing 50k per day phase 2 Sealion, no nasty governments to deal with and an incredibly low tax rate and you get to see us at £5 a share phase 2........... but then of course you have Isobel which as we all know is probably larger than Sealion and will be drilled and evaluated as part of the development of Sealion.
If this plays out as I think it will, we’ll be a cash rich company with significant cash flow producing 50k per day and with a monster of a field in the form of Isobel ready for development. Remember we have 64% of Isobel, zebedee etc so the choice to farm down or self finance development out of cash flow will be there.
Add in the world wide oil supply crunch analysts predict in the mid 20s and this has more potential than any other stock I have come across in 32 years of investing.
My fear is that when this goes, people will jump out and miss some huge returns had they waited.
I continue to predict a 2025 share price north of £10 a share unless we get bought out before hand. The year promises to be the year when it all begins...
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