RE:RE:RE:MALCOLM SHAWS LATEST COMMENTS
Investorwx - Sure, if you say there were only two options, JV or PP, then the JV is a better deal, probably much better. Another option would be to borrow, although I've had awful experiences with companies that borrow. Finally, they could either do it themselves, or at least make a show of doing it themselves to get the JV terms sweetened. VLE management has always been patient and conservative. They could have done conventional wells at Banarli until the cashflow enabled them to go after the deeper zones. And as Shaw pointed out, the deeper zones are so thick that they wouldn't even have to go horizontal, so the extra expense would just be due to the additional depth and to fracking. I think that in a year they'd get much better terms for 50%, decide to farm out less than 50%, or decide they didn't need a farmout at all.
All this, though, presupposes that they really think they've found the Mother Lode at Banarli. But you don't give up half of the Mother Lode for $36m, not when you have a feasible alternative. So I'm just saying that VLE management doesn't seem to buy into Shaw's extrapolations. If Statoil is willing to commit to US$26m minimum, then they must be making an internal case that Banarli is worth $78m+. If VLE is willing to sell on those terms, then their own valuation is probably not much higher. If they thought Banarli had even a couple of tcf (not Shaw's dozens of tcf's), they would have done anything to avoid selling so low.
Thinking of the value as US$78m is fine by me. That's looking at a really nice gain from here. I just have a problem with all the breathless posts about multi-tcf's. I have never seen that kind of thing end well....