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Would anybody hazard a guess what the SP may do from a T/A perspective?
Many thanks................
Many thanks................
ROC - Roc Oil Company
- Thread starter GreatPig
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- roc roc oil company
Kelpie...not the greatest on T.A but i'll give it a shot for you.
From my understanding, ROC seems to have found support around the 1.80 - 1.85 mark, having bounced off these prices 3 times in the last 3 months.
It looks to have bottomed out as a result of this, and if you look at the trend line, that also appears to be quite level/steady.
There is relatively low volume though, which I believe indicates that this could go either way (volatile).
RSI seems to be indicate normal conditions (though slightly towards overbought at 60).
Yeah, if thats crap my apologies...but that's from JTLP's basic T/A 101
DYOR
From my understanding, ROC seems to have found support around the 1.80 - 1.85 mark, having bounced off these prices 3 times in the last 3 months.
It looks to have bottomed out as a result of this, and if you look at the trend line, that also appears to be quite level/steady.
There is relatively low volume though, which I believe indicates that this could go either way (volatile).
RSI seems to be indicate normal conditions (though slightly towards overbought at 60).
Yeah, if thats crap my apologies...but that's from JTLP's basic T/A 101
DYOR
An announcement just out on the drilling of the Coco-1 exploration well in Angola. Is there anyone that could better interpret this information a little more clearly, particularly in relation to the down hole constraints which impacted testing?
“The Coco-1 exploration well has reached a Total Depth of 2,629 mBRT and produced 26o API oil and associated gas to surface during open hole drill stem testing of two separate intervals in the sub-salt sequence. Both tests were impacted by down hole constraints; one relating to sand influx during testing and the other to mud losses to fractures while drilling. The well will be suspended as an oil discovery with the intention that it be re-entered and tested more comprehensively as soon as practical, within the next six months. Until the well has undergone further testing it is not possible to comment on its commercial potential”.
“The Coco-1 exploration well has reached a Total Depth of 2,629 mBRT and produced 26o API oil and associated gas to surface during open hole drill stem testing of two separate intervals in the sub-salt sequence. Both tests were impacted by down hole constraints; one relating to sand influx during testing and the other to mud losses to fractures while drilling. The well will be suspended as an oil discovery with the intention that it be re-entered and tested more comprehensively as soon as practical, within the next six months. Until the well has undergone further testing it is not possible to comment on its commercial potential”.
Any ROC or Anzon shareholders got any thoughts on the proposed merger/takeover?
Haven’t quite come to a conclusion quite yet as I knew very little about Anzon prior to a few days ago. If there are any Anzon shareholders I would be very interested to hear your thoughts in particular. Not quite sure If I’m too impressed with a doubling of the shares on issue and in turn a massive dilution of the upside exploration potential in ROCs portfolio and it doesn’t look like Anzon brings much to the table in terms of exploration. Seems more orientated for short term gains in production and 2P reserves.
I guess there is a strong argument that by merging ROC gains the production and revenue that can be used for future development activities in 2009/10 & 11. Maybe they believe that they can raise more funding through a merger rather than issuing 300m new shares through a rights issue sometime in the future?
By the way Hess just made what is believed to be a fairy significant natural gas discovery in the Carnarvon Basin, a block which is adjacent to the BHP/TAP/ROC JV. 3D seismic is planned to be acquired towards the end of this year with drilling of a well maybe in the 2H of 09. According to TAP, 2D seismic has mapped out around 20 leads/prospects that the 3D data will further define.
Haven’t quite come to a conclusion quite yet as I knew very little about Anzon prior to a few days ago. If there are any Anzon shareholders I would be very interested to hear your thoughts in particular. Not quite sure If I’m too impressed with a doubling of the shares on issue and in turn a massive dilution of the upside exploration potential in ROCs portfolio and it doesn’t look like Anzon brings much to the table in terms of exploration. Seems more orientated for short term gains in production and 2P reserves.
I guess there is a strong argument that by merging ROC gains the production and revenue that can be used for future development activities in 2009/10 & 11. Maybe they believe that they can raise more funding through a merger rather than issuing 300m new shares through a rights issue sometime in the future?
By the way Hess just made what is believed to be a fairy significant natural gas discovery in the Carnarvon Basin, a block which is adjacent to the BHP/TAP/ROC JV. 3D seismic is planned to be acquired towards the end of this year with drilling of a well maybe in the 2H of 09. According to TAP, 2D seismic has mapped out around 20 leads/prospects that the 3D data will further define.
What awful news ROC issued to the stock exchange this arvo. Dr John Doran has stepped down as CEO due to a sudden and serious illness. All I can say regardless of whether he returns to the hot seat or not, is that he has left a legacy for how a CEO should run a company, i.e. always open and transparent with shareholders and having their interests at the forefront for any decision. May sound like a simple task that all CEOs should strive to achieve, yet nearly all fail miserably. I must say arguably one of the best CEOs if not the best going around. I’m sure all of the ROC team and shareholders will be hoping he gets well soon.
For those who aren’t familiar with ROC, John could be compared to someone like Owen Hegarty (from Oxiana) stepping down. A massive loss! (Still a very big understatement).
For those who aren’t familiar with ROC, John could be compared to someone like Owen Hegarty (from Oxiana) stepping down. A massive loss! (Still a very big understatement).
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no offense to Dr Doran, but have you seen the share price for the last few years?? Maybe you could reiterate what has gone right for this company?
Urgalzmine, my apologies for the late reply, have been quite busy. I think your point is very valid and you are correct to say that ROCs share price has taken a battering over the past few years. While the price of the company has been in freefall the underlying intrinsic value has only gone one way and that is up. To prove such a point I will try and point out how I come to my conclusion, do not take any of the comments personally as they are not aimed at you. Also to everyone that reads this thread please note that this is my view only and in no way is financial advice.
Dr Doran has little influence in affecting the share price and as a geologist and not businessman is often very cautious in his approach to forecasts of production and in calculating recoverable 2P reserve figures. In my view ROCs reported 2P figures are well below the actual amount of oil the company will likely recover, which many analysts have also highlighted. I think based on ROCs assets you could easily argue a share price somewhere north of $4 and I have no doubt it well reach this target in due time. In my experience price always catches up to value, however sometime this process takes a lot longer than one would like.
In 2005 the company had virtually no revenue and no production. Since the start of 2006 Production and revenue have been in a strong upward trend over the last two years, having grown significantly from 0.06MMBOE and $AU5.5m in 1Q06 to >1MMBOE and $AU108.5m in 1Q08. Now the company has grown to be well balanced P + E Company with consistent production of around 10,00BOPD which is generating significant cash flows.
In terms of looking at the firm’s income statement and seeing a negative NPAT and in turn EPS, you would have to be ignorant to believe the truth behind these figures, because they definitely do not show a true of the underlying cash position of the company, which is extremely strong. Due to ROCs hedging procedures (note: they only have a small amount of total production hedged) they have had to write of around $US70m, which was a non cash loss. Also ROCs conservative approach to expensing exploration even though some projects are potentially commercial also hides the true position of the company to some extent. Exploration expenses accounted for $US89m in the full year 2007.
Let me use a very simple and rough method to value ROCs oil in the ground assuming a conservative value of $US22.50 per barrel, and ignoring the time value of money. I will also take into account the differences in crude prices received from different fields. My other assumption will be an ER of $0.95 and 300m shares on issue. Yet with an oil prive any where above $100/barrel using a value of $US22.50 for in ground resources is considerably low.
Cliff Head:
10MMBO*0.375 = 3.75MMBO (net ROC)
3.75MMBO*$AU23.68= $88.82m
Value per share = 88.82/300 = $0.296
Note: the JV believes due to good reservoir performance, recovery levels are likely to be considerably higher than original estimates, which have not been factored in to this figure.
Zhao Dong:
Oil trades @ a 15% discount to Brent, which therefore values each in ground barrel at $AU20.13
C&D oil fields: 9MMBO (Net ROC) + C4 9MMBO (conservative estimate)
18MMBO*$AU20.13 = $362.37
Value per share = 362.37/300 = $1.21
Enoch + Blane:
Oil trades at a slight premium to Brent (assume 2%) which therefore values each in ground barrel at $AU24.16
Combined 2P reserves is equal to 4.3MMBO
4.3MMBO*$AU24.16 = $103.88
Value per share = 103.88/300 = $0.346
Chinguetti:
1.05MMBO (net ROC) sells at or very close to Brent spot, i.e. $AU23.68
1.05MMBO*$AU23.68 = 24.86
Value per share = 24.86/300 = $0.083
Beibu Gulf:
Wei 6-12 & Wei 6-12-S 2P estimates range from 19-29MMBO with considerable upside. For this sake I will assume smack bang in the middle @ 24MMBO (Net ROC: 4.7MMBO). However there are 4 additional oil accumulations (Wei 12-8 East and West, Wei 12-2 & Wei 12-3) in the south end of the block where there lays a potentially larger reserve of oil with an estimated P50 oil in-place of about 189MMBO. However a large majority of this oil is much heavier and viscous that the north end of the block. Using a recovery of 17.5% this equates to recoverable reserves of approx 33.1MMBO (Net ROC: 6.5MMBO).
If CNOOC chooses to back in to gain a 51% interest ROCs interest in the block will fall to 19.6%. At 19.6% recoverable reserves net to ROC would be 11.2MMBO. The crude in the north part of the block will likely sell at the Brent spot price however the crude in the south of the block will probably sell at a 15% discount to Brent.
(4.7MMBO*$AU23.68) + (6.5MMBO*$AU20.13) = $242.14m
Value per Share = 242.14/300 = $0.807
Massambala:
This has yet to be appraised, so until appraisal is conducted this is only a rough and speculative estimate. Heavy oil discovery onshore Angola with an estimated P50 oil in-place of about 200MMBO. ROC said based on heavy oil technology it would not be unreasonable to assume recovery of around 20% and perhaps considerably more. For this sake we will be even more conservative and assume a recovery of 15% which equates to recoverable reserves of around 30MMBO (Net ROC: 18MMBO). The oil would sell at a substantial discount to Brent, probably in the order of around 30%. Hence the value of a barrel of oil in the ground equates to $AU16.58.
18MMBO*$AU16.58 = $298.42m
Value per share = 298.42/300 = $0.995
Mauritania:
Additional Development upside includes;
Banda Gas and Oil Field: Recent appraisal drilling – a 2km step out to the east confirmed the consistency of the discovery well. I.e. 14m of net gas pay overlying 10m of net oil pay. Potential P-50 in place resources has previously been estimated around 1-4TCF of gas. Hence the latest appraisal well should only confirm that range, (3.69% ROC interest). Also there has been greater confidence in the geological model and greater understanding of the reservoir which should prevent any problems that occurred with Chinguetti from re-occurring in Banda and other development candidates.
Pelican Gas Field: Potential P-50 in place resources has been estimated around 1-2TCF of gas, of which ROC has a 4.95% interest. Both Banda and Pelican have the potential to be future cornerstone projects in an LNG development.
Tiof: Potential P-50 in place resources has been estimated around 500MMBO, of which ROC has a 3.69% interest.
In terms of exploration, If you can find a mid tier exploration and/or production company with a market cap under $1.5b that has a better exploration portfolio than ROC then be my guest in pointing this out to me, as I would be most curious to know. ROC is one of a few small to mid cap companies in the world that is able to gain exposure to major petroleum systems in which a large majority of the majors (both private and government enterprises) are exploring, developing &/or producing. I won’t go in to much detail, as this info is readily accessible but such areas include: onshore Angola, offshore (deepwater) Madagascar, offshore Equatorial Guinea, North West Shelf (Carnarvon Basin), Mauritania and the Beibu Gulf (China). How much value you place on this is highly questionable, so I will not even try and attempt to do so. Nevertheless many analysts have put a figure of around $0.50 on ROCs exploration assets.
This has turned into a novel and I doubt anyone will read it but hope it helps explain why John Doran has not only been a great CEO in terms of being transparent and open with shareholders but most importantly in building significant value in the company over the past few years as well as positioning the company to add potentially company transforming value in the future. So until the drilling success picks up it looks like it’s just a waiting game for the moment. Have traded in and out for 3 years and now quite comfortably hold, absolutely no worries on my part with the trend over the last 2 years, has just created even more value in such a good company. In terms of bringing fields in to development, you only have to look at the success of the company in dealing with tricky and highly complex fields, which has given the company worldwide recognition.
GREENS
Dr Doran has little influence in affecting the share price and as a geologist and not businessman is often very cautious in his approach to forecasts of production and in calculating recoverable 2P reserve figures. In my view ROCs reported 2P figures are well below the actual amount of oil the company will likely recover, which many analysts have also highlighted. I think based on ROCs assets you could easily argue a share price somewhere north of $4 and I have no doubt it well reach this target in due time. In my experience price always catches up to value, however sometime this process takes a lot longer than one would like.
In 2005 the company had virtually no revenue and no production. Since the start of 2006 Production and revenue have been in a strong upward trend over the last two years, having grown significantly from 0.06MMBOE and $AU5.5m in 1Q06 to >1MMBOE and $AU108.5m in 1Q08. Now the company has grown to be well balanced P + E Company with consistent production of around 10,00BOPD which is generating significant cash flows.
In terms of looking at the firm’s income statement and seeing a negative NPAT and in turn EPS, you would have to be ignorant to believe the truth behind these figures, because they definitely do not show a true of the underlying cash position of the company, which is extremely strong. Due to ROCs hedging procedures (note: they only have a small amount of total production hedged) they have had to write of around $US70m, which was a non cash loss. Also ROCs conservative approach to expensing exploration even though some projects are potentially commercial also hides the true position of the company to some extent. Exploration expenses accounted for $US89m in the full year 2007.
Let me use a very simple and rough method to value ROCs oil in the ground assuming a conservative value of $US22.50 per barrel, and ignoring the time value of money. I will also take into account the differences in crude prices received from different fields. My other assumption will be an ER of $0.95 and 300m shares on issue. Yet with an oil prive any where above $100/barrel using a value of $US22.50 for in ground resources is considerably low.
Cliff Head:
10MMBO*0.375 = 3.75MMBO (net ROC)
3.75MMBO*$AU23.68= $88.82m
Value per share = 88.82/300 = $0.296
Note: the JV believes due to good reservoir performance, recovery levels are likely to be considerably higher than original estimates, which have not been factored in to this figure.
Zhao Dong:
Oil trades @ a 15% discount to Brent, which therefore values each in ground barrel at $AU20.13
C&D oil fields: 9MMBO (Net ROC) + C4 9MMBO (conservative estimate)
18MMBO*$AU20.13 = $362.37
Value per share = 362.37/300 = $1.21
Enoch + Blane:
Oil trades at a slight premium to Brent (assume 2%) which therefore values each in ground barrel at $AU24.16
Combined 2P reserves is equal to 4.3MMBO
4.3MMBO*$AU24.16 = $103.88
Value per share = 103.88/300 = $0.346
Chinguetti:
1.05MMBO (net ROC) sells at or very close to Brent spot, i.e. $AU23.68
1.05MMBO*$AU23.68 = 24.86
Value per share = 24.86/300 = $0.083
Beibu Gulf:
Wei 6-12 & Wei 6-12-S 2P estimates range from 19-29MMBO with considerable upside. For this sake I will assume smack bang in the middle @ 24MMBO (Net ROC: 4.7MMBO). However there are 4 additional oil accumulations (Wei 12-8 East and West, Wei 12-2 & Wei 12-3) in the south end of the block where there lays a potentially larger reserve of oil with an estimated P50 oil in-place of about 189MMBO. However a large majority of this oil is much heavier and viscous that the north end of the block. Using a recovery of 17.5% this equates to recoverable reserves of approx 33.1MMBO (Net ROC: 6.5MMBO).
If CNOOC chooses to back in to gain a 51% interest ROCs interest in the block will fall to 19.6%. At 19.6% recoverable reserves net to ROC would be 11.2MMBO. The crude in the north part of the block will likely sell at the Brent spot price however the crude in the south of the block will probably sell at a 15% discount to Brent.
(4.7MMBO*$AU23.68) + (6.5MMBO*$AU20.13) = $242.14m
Value per Share = 242.14/300 = $0.807
Massambala:
This has yet to be appraised, so until appraisal is conducted this is only a rough and speculative estimate. Heavy oil discovery onshore Angola with an estimated P50 oil in-place of about 200MMBO. ROC said based on heavy oil technology it would not be unreasonable to assume recovery of around 20% and perhaps considerably more. For this sake we will be even more conservative and assume a recovery of 15% which equates to recoverable reserves of around 30MMBO (Net ROC: 18MMBO). The oil would sell at a substantial discount to Brent, probably in the order of around 30%. Hence the value of a barrel of oil in the ground equates to $AU16.58.
18MMBO*$AU16.58 = $298.42m
Value per share = 298.42/300 = $0.995
Mauritania:
Additional Development upside includes;
Banda Gas and Oil Field: Recent appraisal drilling – a 2km step out to the east confirmed the consistency of the discovery well. I.e. 14m of net gas pay overlying 10m of net oil pay. Potential P-50 in place resources has previously been estimated around 1-4TCF of gas. Hence the latest appraisal well should only confirm that range, (3.69% ROC interest). Also there has been greater confidence in the geological model and greater understanding of the reservoir which should prevent any problems that occurred with Chinguetti from re-occurring in Banda and other development candidates.
Pelican Gas Field: Potential P-50 in place resources has been estimated around 1-2TCF of gas, of which ROC has a 4.95% interest. Both Banda and Pelican have the potential to be future cornerstone projects in an LNG development.
Tiof: Potential P-50 in place resources has been estimated around 500MMBO, of which ROC has a 3.69% interest.
In terms of exploration, If you can find a mid tier exploration and/or production company with a market cap under $1.5b that has a better exploration portfolio than ROC then be my guest in pointing this out to me, as I would be most curious to know. ROC is one of a few small to mid cap companies in the world that is able to gain exposure to major petroleum systems in which a large majority of the majors (both private and government enterprises) are exploring, developing &/or producing. I won’t go in to much detail, as this info is readily accessible but such areas include: onshore Angola, offshore (deepwater) Madagascar, offshore Equatorial Guinea, North West Shelf (Carnarvon Basin), Mauritania and the Beibu Gulf (China). How much value you place on this is highly questionable, so I will not even try and attempt to do so. Nevertheless many analysts have put a figure of around $0.50 on ROCs exploration assets.
This has turned into a novel and I doubt anyone will read it but hope it helps explain why John Doran has not only been a great CEO in terms of being transparent and open with shareholders but most importantly in building significant value in the company over the past few years as well as positioning the company to add potentially company transforming value in the future. So until the drilling success picks up it looks like it’s just a waiting game for the moment. Have traded in and out for 3 years and now quite comfortably hold, absolutely no worries on my part with the trend over the last 2 years, has just created even more value in such a good company. In terms of bringing fields in to development, you only have to look at the success of the company in dealing with tricky and highly complex fields, which has given the company worldwide recognition.
GREENS
SCD I am greatly saddened and sorry to hear about your fathers passing. Although I never knew him personally he made all shareholders feel as if they did, which is a great testimony to him. He seemed like an amazing and very thoughtful man and has definitely left a legacy behind for all CEOs to aspire to. I greatly enjoyed following all his lively and sometimes orthodox presentations and interviews. He will be greatly missed by all shareholders.
My thoughts go out to you and your family during this difficult time.
My thoughts go out to you and your family during this difficult time.
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scd1,
I am really sorry to hear of your father passing away.
He was one of the good guys and a remarkable CEO.
Remember speaking with him a number of years ago when i held ROC shares.
He left a good impression.
My condolences to yourself and your family.
markcoinoz
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Hi Greens, in June you did some interesting calculations on ROC in assessing its intrinsic value and I'd like to get your explanation on this para in your post:
Quote Follows:
"Let me use a very simple and rough method to value ROCs oil in the ground assuming a conservative value of $US22.50 per barrel, and ignoring the time value of money. I will also take into account the differences in crude prices received from different fields. My other assumption will be an ER of $0.95 and 300m shares on issue. Yet with an oil prive any where above $100/barrel using a value of $US22.50 for in ground resources is considerably low."
Question: The notional $US22.50...how did you arrive at this? Is it an industry figure? Is it the estimate of the diff between oil price and costs of recovery?
Question: I figure that the 2P reseves at June 30 would only have been around 19.5mmbo and hence I get a ROC value of approx $1.60 (allowing a ER of 87 and an overall disc to Brent of 5%). Why do believe you can value higher than 2P reserves (your figure was 31.8mmbo)?
Sure...if Beibu gets approval and goes ahead, this will add an additional 5.2mmbo to the valuation.
Your figure must be closer to the mark as Huntleys values ROC at $3.40 ish.
Interestingly a footnote at to the half yearly accounts had analysts valuing ROC at June30 as between $2.00 and $2.50 excluding exploration.
Quote Follows:
"Let me use a very simple and rough method to value ROCs oil in the ground assuming a conservative value of $US22.50 per barrel, and ignoring the time value of money. I will also take into account the differences in crude prices received from different fields. My other assumption will be an ER of $0.95 and 300m shares on issue. Yet with an oil prive any where above $100/barrel using a value of $US22.50 for in ground resources is considerably low."
Question: The notional $US22.50...how did you arrive at this? Is it an industry figure? Is it the estimate of the diff between oil price and costs of recovery?
Question: I figure that the 2P reseves at June 30 would only have been around 19.5mmbo and hence I get a ROC value of approx $1.60 (allowing a ER of 87 and an overall disc to Brent of 5%). Why do believe you can value higher than 2P reserves (your figure was 31.8mmbo)?
Sure...if Beibu gets approval and goes ahead, this will add an additional 5.2mmbo to the valuation.
Your figure must be closer to the mark as Huntleys values ROC at $3.40 ish.
Interestingly a footnote at to the half yearly accounts had analysts valuing ROC at June30 as between $2.00 and $2.50 excluding exploration.
Hi Portfolio Plus. This will take a while to read, but hope it explains everything.
I came to a figure of $US22.50/barrel because I couldn’t decide whether to use $20 or $25, because I thought $20 was too low and being as conservative as possible when posting online thought maybe $25 could be a tad high, so decided to opt for a average to resolve this problem. But if you believe this value should be higher or lower then change the figures to suit your thoughts and opinions. Yes the value is basically as you suggest the final cash flow value per barrel of oil to shareholders. Also I must add that a lot of broking firms are using much higher value for booked 2P reserves of around $US30 up to $US40/barrel. However using a DCF/NPV model is much more accurate yet highly complex; this comes out as a fairly rough figure but nonetheless nearly as accurate. I have double cross checked using both methods and the differences in value per share were relatively minimal between methods.
In regards to 2P figures in the Beibu Gulf, ROC has estimated the lowest recoverable 2P figures of the JV partners. Also in a few different interviews former CEO John Doran stated that the oil in place and recovery levels from the north fields (Wei-6-12, Wei-6-12-S) would most likely be greater than those booked by the company.
In addition you must also take in to account that those 2P figures which ROC plans to book (5.2MMBO) are only for Wei-6-12, Wei-6-12-S and Wei 12-8 West fields (A.K.A Phase 1&2). Note: this does not take into account the other structures such as Wei 12-8 East, Wei 12-2 & Wei 12-3 where a larger yet heavier amount of crude lies. Using 2P oil in place figures by “RISC” and recovery factors which petsec stated (listen to PSA interview) would be around 15%, but if you feel more comfortable using a lower recovery rate then go for it. “RISC” assumed 2P oil in place in Wei 12-8 East, Wei 12-2 & Wei 12-3 (phase 3) to total 149MMBO (PSA say 180 - 190MMBO). 15% recovery equates to approximately 22.4MMBO (Net ROC: 4.4MMBO).
So my valuation in the last post shows that ROC could potentially be well over $4 but what I probably should have sated was that for projects that aren’t currently booked or about to be booked should be valued lower based on a weighted risk of them eventually being booked at some future date. I did state this about Massambala. For example noen or only around 10% of the value of Massambala should be included until further appraisal has confirmed the size and commerciality of the structure. While phase 3 of Beibu Gulf is a much higher probability of being booked at some future date hence a 75% value should be placed on these in ground resources.
Re Assessment:
Beibu Gulf
(5.2MMBO*$AU23.68) + ((4.4*0.75)*$AU20.13) = $189.5m
Value per share = 189.5/300 = $0.63
Massambala
((18MMBO* 0.10)*$AU16.58) = $30m
Value per share = 30/300 = $0.10
Zhao Dong
C&D oil fields: 9.6MMBO (Net ROC) + C4 2MMBO + ROC estimate on un-risked recoverable 2P C4/ERA upside of 7MMBO (Net ROC)
(9.6MMBO*$AU20.13) + (2MMBO*$AU20.13) + ((7MMBO*0.5)*$AU20.13) = $303.968
Value per share = 303.968/300 = $1.01
Chinguetti
1.05MMBO*$AU23.68 = 24.86
Value per share = 24.86/300 = $0.083
Blane + Enoch
Combined 2P reserves is equal to 4.3MMBO
4.3MMBO*$AU24.16 = $103.88
Value per share = 103.88/300 = $0.346
Cliff Head
3.75MMBO*$AU23.68= $88.82m
Value per share = 88.82/300 = $0.296
Total Value = $2.47
Note: this does not include a value on ROC’s exploration portfolio, upside in Beibu Gulf because this becomes very arbitrary. But given the much higher values Petsec and Horizon have used, there is obviously a confidence of considerable upside than Roc’s conservative estimates. In addition upside resulting from appraisal/evaluation assets such as Massambala (partially incorporated), Coco, Frankland, Dunsborough, Banda, Pelican, Tevet or Tiof is not included.
Hence a more accurate value would probably be around the $2.50 mark with the potential for a large amount of reserve upside, which does not include any additional exploration success whatsoever. Note, not many brokers would be incorporating the upside at Zhao Dong as aggressively but given ROCs conservative nature, I feel it is fair enough to assume that is a 50% chance at this stage of this eventually being booked.
With regards to recent exploration, you could say the company hasn’t had the success that it has had in the past, with the drilling of a large number of dusters or non commercial wells and frankly this has been extremely disappointing. But you could not argue against the company’s exploration program and portfolio decisions, because management have got their hands on some land that only minor oil companies could dream of.
On to the half yearly accounts that were published yesterday, the media was running around saying ROC has made a net loss of well over $100m is not really a true representation of the company because the true cash loss was only just over $10m, which given the huge exploration program ROC just undertook, is quite reasonable. ROC is still earning huge margins and aggressively investing it back into their development and exploration activities.
I came to a figure of $US22.50/barrel because I couldn’t decide whether to use $20 or $25, because I thought $20 was too low and being as conservative as possible when posting online thought maybe $25 could be a tad high, so decided to opt for a average to resolve this problem. But if you believe this value should be higher or lower then change the figures to suit your thoughts and opinions. Yes the value is basically as you suggest the final cash flow value per barrel of oil to shareholders. Also I must add that a lot of broking firms are using much higher value for booked 2P reserves of around $US30 up to $US40/barrel. However using a DCF/NPV model is much more accurate yet highly complex; this comes out as a fairly rough figure but nonetheless nearly as accurate. I have double cross checked using both methods and the differences in value per share were relatively minimal between methods.
In regards to 2P figures in the Beibu Gulf, ROC has estimated the lowest recoverable 2P figures of the JV partners. Also in a few different interviews former CEO John Doran stated that the oil in place and recovery levels from the north fields (Wei-6-12, Wei-6-12-S) would most likely be greater than those booked by the company.
In addition you must also take in to account that those 2P figures which ROC plans to book (5.2MMBO) are only for Wei-6-12, Wei-6-12-S and Wei 12-8 West fields (A.K.A Phase 1&2). Note: this does not take into account the other structures such as Wei 12-8 East, Wei 12-2 & Wei 12-3 where a larger yet heavier amount of crude lies. Using 2P oil in place figures by “RISC” and recovery factors which petsec stated (listen to PSA interview) would be around 15%, but if you feel more comfortable using a lower recovery rate then go for it. “RISC” assumed 2P oil in place in Wei 12-8 East, Wei 12-2 & Wei 12-3 (phase 3) to total 149MMBO (PSA say 180 - 190MMBO). 15% recovery equates to approximately 22.4MMBO (Net ROC: 4.4MMBO).
So my valuation in the last post shows that ROC could potentially be well over $4 but what I probably should have sated was that for projects that aren’t currently booked or about to be booked should be valued lower based on a weighted risk of them eventually being booked at some future date. I did state this about Massambala. For example noen or only around 10% of the value of Massambala should be included until further appraisal has confirmed the size and commerciality of the structure. While phase 3 of Beibu Gulf is a much higher probability of being booked at some future date hence a 75% value should be placed on these in ground resources.
Re Assessment:
Beibu Gulf
(5.2MMBO*$AU23.68) + ((4.4*0.75)*$AU20.13) = $189.5m
Value per share = 189.5/300 = $0.63
Massambala
((18MMBO* 0.10)*$AU16.58) = $30m
Value per share = 30/300 = $0.10
Zhao Dong
C&D oil fields: 9.6MMBO (Net ROC) + C4 2MMBO + ROC estimate on un-risked recoverable 2P C4/ERA upside of 7MMBO (Net ROC)
(9.6MMBO*$AU20.13) + (2MMBO*$AU20.13) + ((7MMBO*0.5)*$AU20.13) = $303.968
Value per share = 303.968/300 = $1.01
Chinguetti
1.05MMBO*$AU23.68 = 24.86
Value per share = 24.86/300 = $0.083
Blane + Enoch
Combined 2P reserves is equal to 4.3MMBO
4.3MMBO*$AU24.16 = $103.88
Value per share = 103.88/300 = $0.346
Cliff Head
3.75MMBO*$AU23.68= $88.82m
Value per share = 88.82/300 = $0.296
Total Value = $2.47
Note: this does not include a value on ROC’s exploration portfolio, upside in Beibu Gulf because this becomes very arbitrary. But given the much higher values Petsec and Horizon have used, there is obviously a confidence of considerable upside than Roc’s conservative estimates. In addition upside resulting from appraisal/evaluation assets such as Massambala (partially incorporated), Coco, Frankland, Dunsborough, Banda, Pelican, Tevet or Tiof is not included.
Hence a more accurate value would probably be around the $2.50 mark with the potential for a large amount of reserve upside, which does not include any additional exploration success whatsoever. Note, not many brokers would be incorporating the upside at Zhao Dong as aggressively but given ROCs conservative nature, I feel it is fair enough to assume that is a 50% chance at this stage of this eventually being booked.
With regards to recent exploration, you could say the company hasn’t had the success that it has had in the past, with the drilling of a large number of dusters or non commercial wells and frankly this has been extremely disappointing. But you could not argue against the company’s exploration program and portfolio decisions, because management have got their hands on some land that only minor oil companies could dream of.
On to the half yearly accounts that were published yesterday, the media was running around saying ROC has made a net loss of well over $100m is not really a true representation of the company because the true cash loss was only just over $10m, which given the huge exploration program ROC just undertook, is quite reasonable. ROC is still earning huge margins and aggressively investing it back into their development and exploration activities.
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Greens...I want to thank you sincerely for your last post in response to my question on your valuation. I'm just getting back to things now...hence the delay.
I did buy more shares @ $1.11 to average down and because ROC does represent impressive value.
Hopefully the Anzon deal will give ROC a mid-cap position that demands insto attention and the shorters begin picking on someone else.
Of course the recent price of oil doesn't help but then again, maybe in ROC's case it does with the hedging fiasco.
I did buy more shares @ $1.11 to average down and because ROC does represent impressive value.
Hopefully the Anzon deal will give ROC a mid-cap position that demands insto attention and the shorters begin picking on someone else.
Of course the recent price of oil doesn't help but then again, maybe in ROC's case it does with the hedging fiasco.
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More downward movement for ROC. Have doubled down on this one in the last week, and its still dropping to bargain basement prices.
Having a look at the trades today, does something seem fishy?
Having a look at the trades today, does something seem fishy?
LOL CapnBirdseye
Bet you never realised what you posted
Well it made me chuckle
:As for ROC, seems to be joining the ranks of the dogs, or should that be old sea dogs ?
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- 21 September 2008
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I am not a holder of ROC , however that is absolute craziness of where ROC's share price is at the moment .
I see Aspect Huntley valuation is $3.20 on 3/11/2008.
I tend to personally apply the 2/3rds rule with these valuations which is
around the $2.13 mark. So I'm buggered if I know why this is so low.
I see Aspect Huntley valuation is $3.20 on 3/11/2008.
I tend to personally apply the 2/3rds rule with these valuations which is
around the $2.13 mark. So I'm buggered if I know why this is so low.
Apart from the PoO, a couple of reasons for the poor SP performance may be the dispute over the contract for the BMG FPSO ( ROC now have 40% of BMG via AZA takeover) and the apparent further deferment of the Beibu Gulf field. ROC is also 40% partner and operator here.
Disc: Not holding.
