http://seekingalpha.com/article/249...amson-oil-gas-nav-creeping-higher?source=cnbc
Chesapeake Inks Joint Venture With CNOOC; Samson Oil & Gas NAV Creeping Higher
The Deal Terms:
* As you can see in the table above, CNOOC (CEO) is paying $1.267 billion for a one-third interest in CHK's 800,000 net acre DJ Basin position (both Niobrara and PRB).
* This comes to about $4,750 per acre, which is leaps and bounds ahead of all the deals we've seen announced in the Niobrara over the last year, including the CHK acquisition of SSN's Goshen Wyoming acreage for $3,275 / acre last Fall.
* This is CHK's 6th largest JV, in which it has bought low and farmed out high, proving once again that they can still pull off these kinds of deals and that U.S. analysts probably ought to give the CHK team a little more credit when they say they will get the next big deal done, as it generally happens within 3 to 6 months as promised.
As far as SSN goes ...
* I'm upgrading my back of the envelope NAV to $3.00 as you'll see in the table that follows.
* I would not have done this simply due to this deal, but combining the CHK / CNOOC JV as a reference point on the current acreage valuation with the HAL / SSN JV news last week gives me enough confidence to go ahead and move my near term NAV higher.
* Moreover, while CHK didn't share locations of its recent DJ Basin drilling results, it did say that it had drilled 16 wells with IPs "up to" 1,500 BOEpd (2/3rds oil) and I would expect to hear more about several of those on the 4Q conference call in February.
* As we get more details on those locations, I may go ahead and shift from an acreage based valuation of SSN's Niobrara position to a conservative looking take on the recoverable reserve potential of SSN's position, which right now takes me closer to $4 per share. With strong results and more of the position proved up, SSN's position could easily continue to walk higher.
click to enlarge
Chesapeake Inks Joint Venture With CNOOC; Samson Oil & Gas NAV Creeping Higher
The Deal Terms:
* As you can see in the table above, CNOOC (CEO) is paying $1.267 billion for a one-third interest in CHK's 800,000 net acre DJ Basin position (both Niobrara and PRB).
* This comes to about $4,750 per acre, which is leaps and bounds ahead of all the deals we've seen announced in the Niobrara over the last year, including the CHK acquisition of SSN's Goshen Wyoming acreage for $3,275 / acre last Fall.
* This is CHK's 6th largest JV, in which it has bought low and farmed out high, proving once again that they can still pull off these kinds of deals and that U.S. analysts probably ought to give the CHK team a little more credit when they say they will get the next big deal done, as it generally happens within 3 to 6 months as promised.
As far as SSN goes ...
* I'm upgrading my back of the envelope NAV to $3.00 as you'll see in the table that follows.
* I would not have done this simply due to this deal, but combining the CHK / CNOOC JV as a reference point on the current acreage valuation with the HAL / SSN JV news last week gives me enough confidence to go ahead and move my near term NAV higher.
* Moreover, while CHK didn't share locations of its recent DJ Basin drilling results, it did say that it had drilled 16 wells with IPs "up to" 1,500 BOEpd (2/3rds oil) and I would expect to hear more about several of those on the 4Q conference call in February.
* As we get more details on those locations, I may go ahead and shift from an acreage based valuation of SSN's Niobrara position to a conservative looking take on the recoverable reserve potential of SSN's position, which right now takes me closer to $4 per share. With strong results and more of the position proved up, SSN's position could easily continue to walk higher.
click to enlarge