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CGX Energy Inc V.OYL

Alternate Symbol(s):  CGXEF

CGX Energy Inc. is a Canada-based oil and gas exploration company. It is focused on the exploration of oil in the Guyana-Suriname Basin and the development of a deep-water port in Berbice, Guyana. The Company, through one of its subsidiaries, holds an interest in a Petroleum Prospecting Licence (PPL) and related Petroleum Agreement (PA) on the Corentyne block in the Guyana Basin, offshore Guyana. The Company, through its subsidiary Grand Canal Industrial Estates, is constructing the Berbice Deep Water Port. This facility, located on the eastern bank of the Berbice River, adjacent to and north of Crab Island in Region 6, Guyana, is being constructed on 30 acres with 400 m of river frontage. Its subsidiaries include CGX Resources Inc., GCIE Holdings Limited and CGX Energy Management Corp. It is the operator of the Corentyne block and holds a 27.48% working interest. Its Wei-1 exploration well is located west of the Kawa-1 discovery in the northern region of the Corentyne block.


TSXV:OYL - Post by User

Post by Dirksidetrackon Sep 02, 2021 9:26am
273 Views
Post# 33800016

Valuation

ValuationOk so I might be out to lunch on valuation but I see no reason to change my thinking just yet.The way I see it is that the market has already priced in at least $1 per share for the intangible value of the human capital (talent and experience) of the people designing and drilling this well. Once they prove that they can drill these wells to TD then it'll derisk the well design. Say they drill another 10 wells. What is that well design that they can use as a template worth? Keep in mind that the well design is the result of the lessons learned from other operators who have spent over $200 million learning those lessons. These are wildcat wells after all. So I'm putting a $1 per share value on the well design. So at TD they have the well design and drilling team derisked. So I'm expecting a sp of around $3. Now to derisk the field and put a value on that. Say that they find 50 million barrels. Not commercial people say. Well then why are they producing 30 million barrel fields in the Agean Sea offshore Greece and offshore Egypt? Shallower water yes, but FPSOs aren't bothered by water depth. They're dynamically positioned and can stay over a spot thousands of meters below them in almost hurricane like conditions. I still cannot understand why 50 million isn't commercial so I'm putting a $1 per share value on finding 50 million barrels. So we're up to $4 per share. But now the entire block is derisked. What's that worth? So as they continue to derisk the sp will go up. First the people, then the well design, then the discovery of oil, then the block. Yes there are too many unknowns involved but at least we know what we don't know and as those unknowns become known the sp will rise. Just my very humble, rookie investor opinion.
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