Nice post Matt - reposted Correcting and extending Matt's post (SportyJ was right: ~86.6M O/S for FEC):
Nothing wrong with using $5USD/b in the ground. 1 Billion BOE combined discoverys is also reasonable.
Back Of The Napkin with the correct FEC denominator
(TMX hasn't updated their records yet)
Valuations For Corentyne Block
(all assumptions, simple evaluation, no taxes or royalties, only for comparison purposes)
CGX
Port Value = $335,000,000 USD / 335,000,000 Shares = $1USD
(1B BOE @ 32% X $5USD per ) / 335,000,000 Shares = $4.78USD
(BOE/share = .955, BOE/$ = .955/$1.80CDN = .53 BOE/$CDN)
Total Corentyne valuation for CGX = $5.78USD or $7.80CDN
FEC
CGX Share holdings = (257,883,000 X $7.80CDN) / ~86,6000,000 = $23.23CDN per share
FEC Coentyne valuation = (1B BOE @ 68% X $5USD per) / ~86,6000,000 = $61.25CDN per share
(BOE/share = 7.85, BOE/$ = 7.85/$12.46CDN = .63 BOE/$CDN)
Total Corentyne valuation for FEC = ~$84.47CDN
Friday's close CGX = $1.80 CDN FEC = $12.46 CDN
Upside CGX = $7.80/$1.80 = 4.33 FEC = $84.47/$12.46 = 6.78
Hmmm..., and all this assigns $0.00 value to FEC current producing assets which are paying for the Wei-1 drill.
Upside ratio: FEC/CGX = 6.78/4.33 = 1.56
Reminder: FEC does have some intrinsic value (~10CDN/share assigns no value to Guyana) whereas CGX does not.
So, I ask you, where is the smart money going? OMG, my downside is ~10CDN/share, CGX $0/share
Keep slurpin' the sauce boys...