Slow board -check this outTake the estimated recoverable gas which is stated at 9.2 Trillion cubic feet in their main holdings.
To be conservative, I’m assuming that only 35% of that figure is actually recoverable, or 3.22Trillion cubic feet (Tcf) of recoverable gas.
Lets say that 65% of this gas is to FEEC’s credit, or 2.093(Tcf). The rest to CUCBM and ConocoPhillips China Inc.
Divide the 2.093Tcf into 1000cf units (Mcf) and you get saleable 2.093 billion saleable Mcf units to FEEC’s credit.
At $8.00 per Mcf unit, minus $1.50 transportation, lets say FEEC gets $6.50 or $13.605 Billion to FEEC before EBITDA.
Lets give the project a 15 year life and assume it takes 5 years to bring the field to full production. That during the 5 year ramp up 300 million saleable units are produced and sold to FEEC’s account, leaving 1.793 Billion (Mcf) units to FEEC’s credit over the next 10 years.
Annual sales of 179.3 million saleable units (Mcf) at $6.50 (after transportation) gives annual sales of $1,165,450,000 before EBITDA.
After checking the above and forming your opinion of recoverable gas in place, the rest is up to you – to Buy or Sell????
Other factors to consider: Plus or Minus
(-) Number of FEEC shares at full production?
(+) If Chinese currency improves on dollar, FEEC could benefit further.
(+ or -) Will natural gas price increase?
(+ or -) Chinese tax?
(-) Cost to bring the field into full production. See note
(+ ot -) Add your own considerations.
Note: Using less costly vertical wells. High permeability may allow this. Wells should last the total length of production with normal maintenance and their cost spread over life of field.
I believe that using 35% of the recoverable gas figures used by by ConocoPhillips China Inc. (Phillips) and Yunnan Provincial Coal Geology Bureau is conservative as it gives only 11.4% of the potential gas in place estimate.
From FEEC’s website…
Based on estimates by ConocoPhillips China Inc. (Phillips) and Yunnan Provincial Coal Geology Bureau all of FEEC ’s project areas in China combined potentially contain 18.3 Tcf to 24.9 Tcf of total gas-in-place. Using a conservative recovery rate of 50%, recoverable CBM resources are potentially 9.2 Tcf to 12.5 Tcf (FEEC’s share is 5.9 to 12.2 Tcf depending upon CUCBM participation).