Re: The Falcon play - Falcon's present value - Update
in response toby
Developing large acreage positions of unconventional and conventional oil and gas resources
It's amazing the lengths these tools go to fleece the investors. It's time again to separate the wheat from the shaff.
The topic is about the valuation of the Beetaloo acreage. Observe this chart in Falcon's April 2014 Presentation.
As you can see, the Chevron/Beach Energy deal valued at $844 / acre. The Falcon/Origin/Sasol deal is in the same category. I added the Falcon deal to the chart. By the way Falcon should do so in their next Presentation. So, 4,000,000 acres x $844 = 3.38 billion dollars, 30% of that is 1.01 billion dollars. By using Falcon's own criteria Falcon's present value in the Beetaloo is just slightly over $1.00 dollar. Plus Hungary plus South Africa.
However my valuation based on the following criteria.
In North America, the market values 1 trillion cubic feet of gas in the ground at about 1 billion dollars, where the price of natural gas is averaging around $3.50 per thousand cubic feet. However, the European natural gas import price is averaging about $11.50 per thousand cubic feet. More than triple of the North American prices, consequently this gives us a much higher value per trillion cubic feet of gas. Moreover the Asian natural gas prices are even higher; in Japan the spot price can be as high as $18. However, we’ll use the European pricing for our valuation; this would set the combined value for the 107 TCF of gas in the Makó and Beetaloo basins at 300 billion dollars. Also, there’s an estimated 18 billion barrels of oil in the Beetaloo. I think the market valuation of 18 billion barrels of oil would be easily in excess of 300 billion dollars. That’s 600 billion dollars in all.
But then, in January 2013 Falcon announced that an independent technical audit indicated a significant Increase in prospective resources in the Australian assets. Actually 100 TCF more gas and 3 billion barrels more of oil than the previous estimates have indicated. Therefore, the Falcon lands contain an estimated197 TCF of gas and 21 billion barrels of oil in the Makó and Beetaloo basins. Using the aforementioned criteria, the resource estimate does worth about 1 trillion dollars.
Therefore I raise Falcon’s present value from $1.35 to $2.35.
No value has been assigned to the Karoo, but soon it should worth something too.
Falcon noted that the Karoo basin covers 236,000 sq miles or nearly two-thirds of the country, with the 70,800-sq mile southern part of the basin potentially favorable for shale gas. A large part of Falcon’s 11,719-sq mile TCP is in the prospective area, along the southern boundary.
The Permian Ecca Group has three potential gas shales in the Ecca formation. The most promising of these is the highly organic-rich, thermally mature shale of the Whitehall formation. This unit is regionally persistent in composition and thickness and can be traced across most of the basin.
Advanced Resources International Inc., Arlington, Va., estimated the undiscovered petroleum-initially-in-place and the prospective undiscovered resource attributable to these shales on behalf of the US Energy Information Administration. That April 2011 report concluded that the Lower Ecca Group shales contain 1,834 tcf of risked gas in-place with a risked recoverable shale gas prospective resource of 485 tcf.