Assumptions:
GB£1=US$1.55
$79/bbl Brent Oil Price
$4.00/scf
1,612,404,323 shares fully diluted
Puntland
20% share, free carried for first $25m spend on first drill
Initial target Marood-1 now identified, multiple further targets
Estimated OIP for Dharoor – 3.62bn bbls
Conservative target 400mmbbls
NAV of 400mmbbls at $5 sell-on value ($1 net to RRL for 20% share) is $400m net (£258m) equiv to 16p per share fully diluted (4p per 100mmbbls recoverable)
Timescales – 6 month drill each approx, further appraisal drills may be quicker as complications of geology are established. First drill estimate Q1/Q2 2011.
Nugal is the additional block, arguable more prospective given the Conoco data interpretation, but partly on land with disputed rights between Puntland & Somaliland – higher risk.
Georgia
Independent analyst valuation 2008 of $205m ($102.5m net to RRL)
Estimated reserves in place of 383mmbbls plus 2400bcf gas (2400 billion cubic feet)
PSA is 35% of profits shared by RRL and Strait O&G (Georgia Gov. take 65% profit net of costs)
Est profit: $79/bbl less (approx) $25 F&D costs; $54*0.35 = $19/bbl
Initial drill target – 80mmbbls (not accounting for gas), multiple further targets
If successful, and intend to produce, then estimated value at approx $19/bbl profit for 80mmbbls is $1.51bn ($755m net to RRL), £488m, equiv to 30p per share fully diluted (3.75p per 10mmbbls recoverable)
Timescale – 4-6 months to drill 3 more appraisal wells to prove up P1/P90. First drill estimate Q4 2010.
Potential buyout - 100% working interest – would mean NAV of 7.5p per share per 10mmbbls recoverable
Working interest in two blocks, multiple targets
Texas
NCR
25% share of Smith#1, 20% of RB#1 and subsequent (est. 20 wells)
Smith#1 producing 320boepd, 4mmcf/day (restricted flow)
Current P1 valued (PW10) at $36m or £23.22m – NAV 1.5p per share
Full PW10 value (PW10) at $226m or £145.8m – NAV 9p per share
Subsequent wells aimed at proving recoverable resources.
RB#1 has additional 4th payzone, currently in test and producing at 90boepd, 1mmcf/d.
This could be an additional reservoir and if so should significantly improve reserves.
Say 25% of Smith#1 restricted is indicative of average unrestricted future wells at 20%, across 20 wells potential for 1600boepd, 16mmcf/d net to RRL - $29.2m profit net pa – EPS 1.81p, equiv to SP support of 18.1p.
Timescale @ 3-4wells pa – 5-6 years until full value reached (approx 3p now plus 3p per year increase)
ECV
13.56% share
Potential for 22 wells with 220,000 bbls each
F&D costs $7.15/bbl, profit $70+/bbl
Estimate average 500bopd gives profit $1.732m pa net to RRL (£1.117m)
EPS of 0.0693p per well, or equiv to SP of 0.7p/share
22 wells – future SP value 15.2p
Timescale @ 3-4 wells pa – 6-7 year until full value reached (approx 2-3p per year increase)
Trinidad & Tobago
10% working interest in three fields – Morne Diablo, Beach Marcelle and South Quarry
Fully funded for future improvements, fully equipped drilling and production facilities
Additional prospective resources in drilling deep formations – 19.9mmbbls
Currently producing 700bopd (70bopd net to RRL), $0.767m profit pa, EPS 0.05p, SP support at 0.5p
Future management of wells to increase production to 3500bopd (350bopd net to RRL), $3.8m profit pa, EPS 0.24, SP support at 2.4p
Ultimate goal of 10000bopd (1000bopd net to RRL), $11m profit pa, EPS 0.7p, SP support at 7p
Timescales – 36 month target for 3500bopd (may be accelerated), 1000bopd/year increase
Conclusions / notional SP targets:
6 months – Puntland 6p; Georgia 15p; NCR 6p; ECV 1.4p; TT 0.5p – Total 28.9p
12 months – Puntland 16p; Georgia 30p; NCR 9p; ECV 2.8p; TT 1p – Total 58.8p
24 months - Puntland 32p; Georgia 60p; NCR 15p; ECV 6.5p; TT 2.5p – Total 116p
Of course it has to be said that these are my own NAV and EPS figures, established from my own research and with the continued valuable help and expertise of the various posters on this board. You may wish to use these figures to form the basis of your own research but as always, do your own research and most importantly don’t believe all you read on a bulletin board.
I’m not intimating these are either the minimum or maximum prices to expect, and I fully expect any share to rocket into overbought territory on any commercial find (ie 7p on Smith#1 discovery in Dec’09).
In addition to these prices, I haven’t included for NCR upgrade, or Puntland offshore (which I am of the opinion will be tied up within 6 months).
Sources:
Puntland – RNS info; AOI website; previous oilfiled sales (HOIL-TLW); Sproule report
Georgia – RNS info; Letter from Peter Nesveda from Intuitive Ltd;
Texas – Lonquist report; RNS info; investor discussions with PL;
TT – Garb report; RNS info (RRL and Monitor); investor emails;
Conclusions – my own head…
Take it easy, go long.
Cheers
DD
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