Revenue24 Jul 2020 11:20
Good post, credit to Herschel K on ADVFN;
Just to set my mind at rest and based on PB's statement in interviews that they are planning for Cas to produce 100MMCf per day going forwards, I've done a few bag of fag packet calculations.
These are just for Cas, so take no account of Coho or any other existing production, nor do they take account of the possibility of success at Chinook, Cas Deep, or Royston going forwards.
I did the calculation across three different realised gas price assumptions of $2.50, £2.00 and $1.50 per MCf (as we don't know what deal they will strike with the NGC, and I consider $1.50 to be the likely bottom end, but that's only IMO).
At 100MMCf per day, the three gas prices give daily income (80% share to TXP) of $200k, $160k and $120k; so annual income (assuming 350 days, with some down time for maintenance, etc.) of $70m, $56m and $42m.
I have assumed an ongoing cost per annum of $25m, which covers royalty payments and TXP's drilling programme.
Therefore, the above income gives annual earnings of $45m, $31m and $17m at the three gas prices indicated.
On a p/e ratio of 15, you get market caps of $675m, $465m and $255m.
Therefore, with 184.161m shares in issue (I have assumed no further share dilution on the basis of the debt finance they have arranged recently), you get a share price of $3.67 high, $2.52 mid, and $1.38 low.
Or, £2.89 high, £1.99 mid, £1.09 low.
IMO, unless my calculation assumptions are way out (and I like to think I've been quite pessimistic with the annual costs going forwards), there is 50% upside to the current SP, even at the low end, and bear in mind - this is only for what we CURRENTLY KNOW on Cas.
Nothing in there for Coho, Chinook, Cas Deep or Royston.
Thoughts welcome, as always; but if we are successful across the other assets going forwards, the potential here is mind-boggling IMO.
H
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