RE: RE: 12% share of revenue?Some good points cyber, I think you have the right perpsective about the objectives of proving the reserves and then selling the reserves. The value of the reserves will only be proportional to the exportable revenue potential of those reserves and when I saw that agreement at 12 %, it really didn't seem like much to me, especially when there is still no certainty of the reserve estimates yet. That agreement was made at the end of August 2009
You have to note that recoveries will not be 100%, HOC estimates recoveries ranging from 50-70% on it's parcels so far given their drilling to date. $50/bbl netback is not conservative, seems a little high given a buyer could possibly only get a return on exported production of 12%.
So if you want to do a recalculation with these factors in mind, i.e. recovery rates, realistic netbacks,etc. and provide a 'range' of the possible outcomes rather than the 'best' possible outcome you will price some realism into the valuation. It's always smart to calculate the worst and best case scenarios so you know what you are dealing with on both ends of the spectrum.
I'm thinking that for very conservative estimates I would use the following:
- 1 billion rather than 2 billion.
- Let's say 50% recovery
- Let's say $25 net back.
- 37%
Now tell me what you per share valuation is?
What did Addax sell for on a proven bbl basis?