RE: Cannacord19 Dec 2021 06:08
In line with other thoughts, I see greater than $1/bbl valuation being reasonable
With Canaccord using an averaged resource valuation of $5.4/bbl in their analysis, and then discounting back to a $1/bbl in the TP basis 2022 valuation.
The discount is 81.5% to recognise subjectivity
Canaccord quote
"We recognise the subjectivity of project risking, so we now simplify our target price”
subjectivity:
The quality of being based on or influenced by personal feelings, tastes, or opinions. "he is the first to acknowledge the subjectivity of memories" the quality of existing in someone's mind rather than the external world. "the subjectivity of human perception" Definitions from Oxford Languages
Effectively they are applying an 81.5% discount for the risk that PANR are being biased in their interpretation of data.. It is overdone in my opinion, as ESIS and Baker Hughes VAS reports, provide a high degree of independence to the interpretation This seasons results if positive will answer this question, which should see the 81.5% discount dismissed, leaving the progressively derisked assessments standing on their own.
But as always a buyer will not be wanting to pay full NPV
It is hard to give credence to this risking based on subjectivity, or restated lack of objectivity, when objective third party data has also been presented.
Baker Hughes provide this in the independent blind VAS data and conclusions, blind meaning Baker Hughes analysists did not know where in the well samples came from, this removes any possible source of bias. The lab work is behind a wall of secrecy, all they know is here is sample number xx
Further more Baker Hughes are a global major in Oil services analysis, their reputation is their commercial advantage, they are not going to risk it to promote little old PANR
PANR quote
“The VAS process entailed taking samples every 10-20 ft of well depth, hermetically sealing approximately half of those samples to avoid any evaporation of hydrocarbons, with the other half of the samples tested after exposure to air. These samples are then subjected to mass spectrometry analysis in the Baker Hughes AHS VAS lab. Significantly, the VAS analysis confirmed the presence of continuous stacked oil-bearing reservoir zones over a 3,700 ft interval starting at the regional top seal above the Shelf Margin Deltaic reservoir zone down to target depth at 10,456 ft. Every single sample taken over this interval extracted oil.”
From the VAS data
Every sample (416) had oil in 3700 feet of strata below the DkrD shale
It cannot be over emphasised, EVERY SAMPLE, even the poor rock quality sections between the identified reservoirs had oil
A layman's view of this is the top seal is effective, oil has migrated here and is trapped regionally, not just in the reservoir quality sections. This play is not dependent on individual reservoir seals, the regional Decker D seal is holding it all.
It means any good reservoir below the Decker D sea
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