Galp Valuation for Murombe This was posted from the Chariot board. They are using $5.00 per barrel to calculate Galp's value on Murombe if it comes in. If this is possible then HRT would be valued at roughly 20 Billion dollars.
Galp PL - Murombe drilling campaign kicks off
Eur 12.65, BUY, FV Eur 16.9
HRT (HRTP3 BZ, R$ 2.31, Neutral, FV R$ 2.6) announced yesterday that the Murombe-1 well, located in PEL 23 offshore Namibia, was spudded on 1st June. The Murombe-1 well lies in a water depth of 1,391m, located c.15km east of the Wingat-1. This well will test a 1,000sqkm basin floor fan on a way4-dipclosure at its highest structural elevation within a turbidite complex. According to HRT, the main objective of this well is to test the resource potential of Barremian aged turbidite reservoirs that have a well-defined seismic amplitude anomaly on the PSDM 3D data set. HRT will also target a shallower secondary objective, the Santonian aged Baobab confined channel complex with turbidite reservoirs, which is between the two oil producing source rocks that were found by the Wingat-1 well. The Baobab reservoir is expected to be encountered at 3,670m depth below sea level and the Murombe reservoir is expected to be encountered at 5,090m. The well will be drilled to a projected total depth of 5,360m and drilling is expected to last c.72 days.
Opinion: Neutral for Galp, which holds a 14% stake in PEL 23 as this well was spudded on time with HRT's guidance. HRT said on the conference call that when it analysed the results from the Wingat well that the PoS of the shallower prospect of the Murombe well (Baobab) had increased, as the deepest source rock found at Wingat could have the capacity to generate high volumes of oil and potentially charge the Baobab prospect. We recall that results from the Wingat well showed two source rocks within the oil-generating window, with one being very rich and several hundred meters thick. HRT also said that it would target further two deeper structures, Murombe Fan and Silveradi, whose PoS remained unchanged following Wingat as they would need a deeper source rock to be charged. In this announcement HRT doe not mention the Silveradi prospect, which we believe results from the fact that it is very close to Murombe Fan.
We believe Galp is a good way to play this prospect from a risk/reward perspective. Based on the data provided by Galp and HRT before the drilling of Wingat, we estimate that the Murombe (PEL 23) prospect has gross mean unrisked resources of 4.5bnbbl and PoS of 25%. Assuming our $5.0/boe NPV and 639mmbbl resources net for Galp – it could potentially add up to Eur 3.0/sh (24% of current market cap) to our FV in a blue sky-scenario. Do note that the overall cost for Galp of the three back-to-back wells planned for Namibia is Usd100m, which represents just 1% of the current market cap. We believe that now that most of the overhang risk has been removed, investors will focus on Galp's fundamentals and its significant exploration upside potential. Galp is a Silver Bullet BUY for Q2.