RE: RE: CGX --SHARE PRICE
According to Kento, CGX's JV partner, which he speculated may be Exxon, will be willing to pay a signature bonus of $100 million.
This got me thinking, why would any company pay a signature bonus of $100 million when the price of oil today is in the $40-$45 price range?
In my opinion, the reasoning for paying this amount may be, :
a) Because of the time when the oil actually starts to flow from the wells, the oil price may be in the $100 - $150 region again, therefore if CGX is sitting on a world class discovery then in present value terms $100 million for 50% of this is a bargain.
b) In light of all the work that CGX has already done, this project may be a "shovel ready" project for a major like Exxon, who would have to simply pay a price for all the work that CGX has done as well, which if they had to do themselves may have cost a lot more.
c) From my previous post "Exxon Brazil Find may hold 8 billion barrels of Oil" the bloomberg article states that "Exxon Mobil is spending $79 million a day this year to search for oil fields, construct platforms and renovate refineries", thus the $100 million signature bonus would only be 1 1/4 day of the exploration budget.
Therefore making the spend feasible if there is a high prospect of finding oil.
Just my two cents to stimulate more discussion.