RE: Justin?Cut and paste from the link ...
Here's the numbers again reworked to include the PP and the fact that we are no longer giving the KRG 60 million shares:
Repost for newer investors:
Formula to estimate NAV for VST:
Oil in groung estimate X Recovery Factor X 37% = VST's share of Recovered oil
But how much is that worth? Well, according to Scotia Capital analysist Gavin Wylie , 148MM barrels of recovered oil is worth $15.96 a share to NIKO. That is his analysis from September 2009 on Niko. Since Niko has 50 Million shares, that means that 148MM Barrels is worth $798,000,000.00. (50,000,000 X $15.96= $798,000,000.00)
That actually comes out to $5.39 per barrel. ($798,000,000 / 148,000,000 = $5.39)
Anyways,lets do the math for now much 148MM Barrels is worth to VST. It's very simple,just divide 798,000,000 by 235,000,000 ... and you get $3.40 per share for every 148MM barrels of recovered oil.
To make things simple,lets just calculate how much per share we are worth per 100MM barrels - 100/148 x 3.40 = $2.30 per share for VST per 100MM barrels of oil.
Of course the big question is how much oil is down there and what's the recovery rate. This is where you get to plug in the numbers with the formulaabove ...
As an example, if oil in ground is 2.5 billion barrelsand the recovery rate is 50% and our share is 37%(2,500,000,000 x .5x.37) then our NET share of this oil is 462,500,000 barrels. Asestablished earlier, every 100MM barrels is worth $2.30 per share to VST, so just multiply 2.30 x 4.625 and VST NAV should be $10.63 pershare.
So it looks like we will need about 2.7 BILLION barrelsof recovered oil for Vasts share price to go to $20.(2,700,000,000 X.37= 999,000,000 barrels for VST . $2.30 X 9.99 =$22.97)
That's do-ableif we hit 4.5 Billion barrels with a 60% recovery rate... and a 60% recovery rate is just about what Heritage is looking at for Miran:
- Miran West structure estimated oil-in-place of between 2.3 to 4.2 billion barrels
- Recovery factor expected to be between 50% to 70% due to the highly fractured nature of the reservoirs
The published estimated recovery rate for VST is 16.5%. This IMO is ridiculously low.