RE:RE:ValuationsYes, I'm just trying to come up minimum required recoverable to establish a base line for valuation. Say they have to drill 15 injection/production wells. That's about $1billion. FPSO ranges from $300 million for about 20,000 bbl/day production capacity to $3 billion for 250,000 bbl/day. So lets assume $1 billion for an FPSO around 80,000 per day production. Add on subsea tie-backs. I have no idea of what that would cost. So ball park assume $3.5 billion to produce. Say you buy the field for $15 per recoverable barrel. So that's $15 × 150 million = $2.25 billion.
So now up to about $ 5.75 billion to pump the first barrel. Do E&P costs include operating expenses, capital costs, taxes? Let's assume that E&P costs do include operating costs etc.
So $5.75 billion for 150 million recoverable is $38.33 per barrel E&P costs. So we're in the ball park with Exxon's costs. I've seen the term "net back" being used. The difference between all revenues minus all costs. So what's a decent net back? $20 per barrel. Add that to E&P costs and we're now up to $58 per barrel that you'd need to sell oil at to make $20 per barrel, paying $15 per recoverable barrel for an oilfield. Seems like an attractive enough investment to me for an oil company.
Now, what if Corentyne contains say 2 billion barrels recoverable in other structures. Now fec/cgx have $2.25 billion to do as they please with. They could capex it all into building the port, finding more oil, whatever. What would that do to the sp? As long as total assets and top line revenues were growing along with equity per share and free cash flow then everybody would be happy.
So I'm thinking that, at the very least, 150 million recoverable is quite acceptable for me. Am I wrong in thinking this?