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Trading BKP: what's your value if NEC's number is right?

Discussion in 'Shares' started by wdongli, 6th Dec, 2010.

  1. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    sevencents77 in hotcopper gave out his assumption about the Enterprise Value based on his understanding of the oil reserve which shown in AEC presentation of E127 and E128:

    (wli: the number about the un-risked undiscovered original oil has been checked by reading ACE presentation on 19 Nov 2010. Thank him for his excellent and helpful assumption)
    Hi PeterN23,

    wli: use public information as base to get a honest but perhaps not right value calculation

    You asked for a response from the more knowledgeable, but Ill give it a go anyway. My estimates are based on a Ryder Scott report issued by PFC on the 19/11/2010 that is available to the wider market and no I am not privy to any inside knowledge or information.

    wli: Professional base for EV and his conservative EV calculation

    As far as Im aware Macqaurie use a $12 in ground valuation per barrel of oil and they would use P50 estimates which are 7.5Billion according to the ryder scott report p15.

    But firstly I will base my crude maths on only $1 per barrel and the P90 of 4.8Bb oil.

    (wli: P15 is higher assumption of the reserve than P90 but $1 would be very tough gound value too.)

    wli: EV range based on Professional and tough calculation

    4.8 bil x 25%(BKP share) = 1.2Bb oil x $1 in ground value
    = $1.2 billion. Now using 10% risk adjustment gives us $120 million divided by BKP shares on issue = 6.8cps. So based on Macqaurie $12 in ground value you get 81cps

    Now using the same math on the P50 estimates in the ryder scott report of 7.5 Billion barrles at my very low conservative $1 in ground value you get 10.6 cps and using Macqaurie $12 value you get $1.27 per share.

    wli: Summery of the calculation

    So to sum up I used $1 in ground value which is absurdly low. Brokers use around $12.

    P90 @ $1 = 6.8cps
    P90 @ $12 = 81cps

    P50 @ $1 = 10.6cps
    P50 @ $12 = $1.27 per share.

    wli: sevencents77 wants to be honest

    Crazy numbers when you consider brokers use around the $12 in ground value.

    Disclaimer: Please do your own research and I am not a financial adviser or qualified to give any advice. The above figures are produced from estimates available in the PFC presentation material.

    Not to be scientific calculation

    The above is to open mind and get a roughly figure to judge and decide what I should do and share the information only.

    Share price and the EV could not be taken as the result of science calculation. It should be used as a reference point for your decision.