GREY:ARHTQ - Post by User
Post by
eventtraderon Feb 18, 2010 9:56am
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Post# 16794921
Implied barrels
Implied barrelsG40, could you please show the board your arithmetic for calculating1.5b barrels implied by the current share price. I only get 127mbarrels using your approach: VST market cap around $190m. Divide byVST's working interest of 37% to get the market value of the field of$510m. Then divide again by $4 (the M&A valued you found from IHS)to get the # implied barrels, or 127m barrels priced in atC
.70/share.
This is roughly inline with the valuation model G37 shared with us last week:
Assume Royalty 10%, Net oil 57%, R-factor 24% and Working interest 37%
Net interest = (1-10%) * 57% * 24% * 37% = 4.5%
Assume oil sells for $50 and VST net interest is 4.5%, then VST willget $50*4.5% = $2.23/barrel for each barrel. With a market cap of$190m, this implies about 85m barrels are priced in.
How do you get 1.5b? Are you missing a decimal somewhere?