(From a Resource Measurement Friend)
Let's think this through!!!! (U.S. Measurement and US $)
So…..in the October Falcon Oil and Gas Presentation Release titled Beetaloo Basin Update and in slide 12 they offer up an average of 126 BCF per Section…..A Section is 1 Square Mile (640 Acres)……..total acreage per the permits and agreements with Origin and Sasol is 4,600,000 Acres..... the Beetaloo permitted areas is a total of 7,187.5 Square miles…….and Falcon will have, as their 30% interest, some 2,156.25 sq/miles. For this estimate in Falcon’s Value….we will use their 30% stake………Using 50% Probability of recoverable resources let’s consider the following based on initial value…..no decline rate considered, no enterprise value considered……………. Just initial value to Falcon!!!!
So, U.S dollar value of 1000CF of natural gas is currently @ $3.72 +/-……. (Falcon Market nearly twice this)
Per the Falcon provided chart....avg of 126BCF = 126,000,000,000 ÷ 1000= 126,000,000 cubic feet nat gas per section
126,000,000 × $3.72 = $468,720,000.00 per section
Falcon has 2,156 sections (2,156 Square Miles)….. here we will apply the 50% rate of probable resources, natural gas only….based on Falcons own information of October 2016 using probable recoverable
1,078 sections × $468,720,000.00= $505,280,160,000.00………yes, billions of………dollars of potential value………………..assigned to Falcon
So, let’s take out 60% (could be higher or lower but a buyer will take this out for valuation) for production and development costs….that leaves some $202,112,064.00 in potential profit over an estimated unknown life of the project. Let’s reduce this by a 10% variance in resource access and other costs. That leaves Falcon with approximately $181,900,857,600.00 in potential value…life of project dependent at point of valuation
So…to get a value with no enterprise impact…no demand just outstanding shares to a value estimate as derived above……..we take the potential value and divide by the number of outstanding shares
$181,900,857,600.00 ÷ 921,537,517 common shares issued = $197.39/share…………Is a buyer going to pay this?….most likely not……..too much risk and unknown in this industry, but……it will certainly be enticing to a buyer and more information is yet to come. But….they can value this resource now if they so choose….and for the stake holders sake it is time to value the asset…….
Question….will the value be based on life of the asset…..or a defined period of time? Decline rate will certainly adjust this at each section. Each section will hold production variances over the life of the asset……resources will diminish over time……..how will it be valued is a real unknown?….But, it’s easy to see what could be possible.
From the October 12 press release…. “Evaluation to determine the resource size is underway”
From the October 12 Company Presentation, Slide 12…”
Gas In Place (average BCF/section)…………………….126
Which one is accurate, or do they already know? Did they misstate info in the table in the updated company presentation? .......Time to give shareholders a return……it’s time!!!!!!
