WTE looks fantastic value at these levels12 Aug 2021 13:24
Huge thanks again Harel for posting such excellent information. The news that Exxon is seeking to undertake a 12 well campaign on Canje is massive news for WTE and transforms the outlook for the company and the shares. Despite being about to drill Sapote-1, the biggest drill for WTE in terms of net barrels and closest to the main action on the massively successful Stabroek Block and Block 58, the market seems to have practically written off WTE and is pricing it as if this next drill is last chance saloon for the company when nothing could be further from the truth.
With further drill program announcements due soon on Kaieteur, thanks again Harel, and ECO expecting to announce drill plans on Orinduik by end Q3, it seems that WTE may soon have exposure to an extraordinary number of wells in Guyana over the coming 18 months making the current SP an absolute steal.
WTE first entered Guyana in February 2017 when it took part in ECO's listing placing on the LSE. At that time only the Liza, Liza Deep and Payara discoveries had been made on the Stabroek Block. Since then Exxon has made over 20 discoveries on block totalling over 9 billion barrels, several discoveries have been made on the adjacent Block 58 in Suriname and a few others in other adjacent blocks.
During this time WTE has steadily built a portfolio of indirect interests in three licences adjacent to Stabroek and one in Suriname via shareholdings in JHI, Cataleya, ECO and Ratio. This has been largely funded using WTE shares issued at an average of around 12.25p over this period, a 50% premium to the current SP. The fact these holdings are indirect means that WTE will not have to go cap in hand to shareholders to fund the huge number of wells expected, but can sit back and enjoy the ride.
Although modest in percentage these interests give WTE exposure to P50 net recoverable in the order of 150 MMB. Previously Stabroek partners suggested that due to extremely low break evens that barrels in the ground in this area are worth around $7 per barrel, which puts WTE's blue sky potential at around £750M or 520p per share as against a current market cap of only £12.M and 8.5p share price. Clearly that will not all be realised, but it will take very little in the way of success to seriously move the needle here and it looks like WTE is going to have a huge number of largely Exxon operated rolls of the dice to do so.
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