RE:CGX VALUATIONSA quick update to my January 13 post regarding CGX Resource Valuation given Eco-Atlantic’s news release this morning (publication of their CPR report).
In short, Eco’s most recent independent resource report released earlier today has increased its cretaceous leads from ~2,000mmboe to 3,936mmboe. As mentioned on my January 13 post – we are simply excluding tertiary leads in CGX valuation to be conservative.
In addition, the Carapa upper cretaceous discovery has increased independent auditor’s views regarding POS (probability of success). Upper cretaceous leads on the Orinduik license have an increased PoS from below 20% to more than 30%.
The upper cretaceous lead having the highest PoS on the Orinduik license is Rappu (listed at 35.10 PoS). Recall, Rappu is expected to contain ~500mmboe and is locate below Joe-1 oil discovery. Of interest to CGX shareholders – Rappu is expected to extend into CGX’s Demarara license.
Taking Eco’s updated reserve report released this morning and applying methodologies used by Hannam & Partners (Nov 4 2019) and Pareto (Sept 3 2019) – see below rough valuation of CGX assets. Base case oil price used is US $5/bbl.
I have made the following revision to the model:
- Increased upper cretaceous leads to ~30% (aligned with Eco’s CPR report).
- Increased Demarara cretaceous leads from 1,500mmboe to 2,000mmboe.
In summary, low case scenario (US $2/boe) shows support for a
risked CGX sp of ~US $5.00.
Demarara License:
- 2,000mmboe (upper cretaceous only)
- CGX Net Interest 66.7%
- Geological CoS: 50%, Commercial CoS: 70%; Total CoS 31.5%
- Un-risked $5.2B; Risked: US $1.638B
- Un-risked US $17.41; Risked sp: US $5.48
Northern Corentyne Area:
- 1,000mmboe (upper cretaceous only)
- CGX Net Interest 66.7%
- Geological CoS: 70%, Commercial CoS: 70%; Total CoS 49%
- Un-risked $2.6B; Risked: US $1.274B
- Un-risked US $8.7; Risked sp: US $4.27
Utakawaaka:
- 250mmboe
- CGX Net Interest 66.7%
- Geological CoS: 45%, Commercial CoS: 70%; Total CoS 31.5%
- Un-risked $650M; Risked: US $204.75M
- Un-risked US $2.18; Risked sp: US $0.69
Eagle Deep:
- 750mmboe (takes into account only oil / condensate resource)
- CGX Net Interest 66.7%
- Geological CoS: 45%, Commercial CoS: 70%; Total CoS 31.5%
- Un-risked $1.95B; Risked: US $614.25M
- Un-risked US $6.53; Risked sp: US $2.06
SUMMARY OF CGX (UPPER CRETACEOUS)
- Total Risked SP US $8/bbl: US $19.99
- Total Risked SP US $5/bbl: US $12.49
- Total Risked SP US $2/bbl: US $5.00