The $2B+ valuation for the current leasehold comes from the expected amount of reserves -- 400M+ barrels -- times $5 per barrel which Mr. Bemdall says is the value at which reserves trade in Australia.
I can't speak to the accuracy of the $5, and don't know if that price is for proven reserves, unproven reserves, or whatever. In this case, we have undiscovered reserves, so not sure of applicability of the $5 figure (other posters can advise).
But, the $5/barrel 'net' by definition takes into account the cost of production.
The problem with that valuation method for me is that it does not take into account all of the factors which have to line up to create commercially viable reserves. These are all discussed in the RPS Energy report in detail and 'net out' to a 2% likelihood for Bellevue, and 0.72% for Thunderbolt, the two prospects in the current leasehold.
2% times $2B comes out to $40M -- which is still several times the current valuation of the company. The reason for that is that the market is not confident that EEGC will even get to spin the roulette wheel -- takes money. Per last week's PR, $12M to put the money-raising infrastructure in place before Sure Asset Management can place the notes. And the company has so far said nothing about sourcing the $12M, which is twice the market value of the company.
Seems to me a JV with an oil company would be the best way to raise funds. Should be doable, if the geology is as compelling as everyone says. So what if EEGC has to give away two-thirds of the company, say. Take the projections which Mr. Haftel has provided and divide by three, shareholders would still be very happy.
Note that even with Sure Capital, a percentage of gross profits is given up with the notes, which is like giving up part of the company.
AI
