Hey Steve, JDizzy and Tisdale,
Earlier this week someone asked what would a natural gas find be worth. I thought this was a good question as most wells have both gas and oil. Here's what I've calculated for Natural Gas produced by MJ#1,2,3,4,5 etc....
For this exercise, I'm assuming that most of Zion's NG discovery would be exported as Israel already has roughly 38 trillion cubic feet of natural gas (NG) discoveries, which would cover an estimated 75 years of Israel's NG needs (from "Natural Gas in Israel" Wiki).
Natural Gas futures markets typically price NG in $ per Millions BTU (British Thermal Units). Current NG European import prices are $7.19 per Million BTU (MMBTU). That equates to about $7.32 per 1000 cubic ft.
The other thing we need to factor in this calculation is the cost of the infrastructure required to get the gas processed and transported to the closed terminal. Given that in the US in 2014, NG pipeline cost ~ $6.57 MILLION per MILE, using that number it would cost $131 million just install enough pipeline to transport the gas 20 miles (which is roughly the distance to the closest Israeli NG infrastructure point at Afula). I estimate onsite processing equipment would cost about $5 million, so total infrastructure cost would be about $135 million.
Given these assumptions, a discovery of 1 trillion cubic feet of NG would be worth (1 trillion cu.ft. X $7.37 / 1000 cu.ft.) $7.37 Billion, less $135 Million for infrastructure, for a net of approx $7.25 Billion.
That means, assuming 70,000,000 outstanding shares, each Trillion cubic feet of NG would be worth $103.57/share. Using a P/E of 10, the stock price would be worth $1035.70/share for a 1 Trillion cubic feet discovery.
Now here's the fun part. If Zion's NG discovery winds up the same as the Leviathan discovery, which is 22 trillion cubic feet of NG, the discovery would be worth 22 X $1035.70 = $22,785/share.
That would be added to whatever the oil discovery is worth.
Please feel free to check my math as I've been multi-tasking while doing this. Have a good night my friends
