GREY:MGMCF - Post by User
Post by
OilEngon Sep 16, 2010 4:56pm
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Post# 17457918
A $10 Stock?
A $10 Stock?I heard a couple of interesting things from the Peters and Co presentation.
1. The President hinted at what he thinks the stock is worth. My calculation is $10 based upon his statement that the present market price would give a 75% compound rate of return if held until the pipeline comes on stream.
2. Contrary to media reports Esso did not ask to delay their decision on whether to build the pipeline. Rather they said they cannot START construction by the proposed expiry date of the permit to be given by the NEB of December 31, 2013. Henry Sykes seems to feel that this is reasonable given how long it takes to mobilize the men and equipment. Esso will have to start spending immediately on the pipeline even to meet a 2014 start date.
3. He said they have locked up the Mackenzie delta on either side of the pipeline so anyone who wants to explore in the Delta is going to have to come to them. (They acquired a ton of acreage in the July 2010 land sale). This is a strong signal that they are going to farm-out exploration and development expenses rather than finance them through debt or equity issues. Good news for shareholders as I don't like getting diluted at this price: it is way too cheap.
4. He said their is a strong chance they are going to drill an oil prospect this winter.
5. Shale gas is not a threat to Arctic Gas because with the conventional gas is in terminal decline. Even with the very large reserves, shale gas will have trouble making up the deficit because of their huge decline rates. (Remember that shale gas is perhaps 15% of production today with the other 85% is conventional gas. In addition, Even without growth in North American gas demand, we are going to need shale gas AND Arctic gas.
6. Arctic gas is cost competitive with most gas basins in North America even after the large pipeline toll.
All and all a good news story. After the NEB decision we will see what the Federal government has to say. Get ready for a big price jump the day of the NEB decision.