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+--- Thread: Stansberry and Matt Baldali below (/showthread.php?tid=1238)
RE: Stansberry and Matt Baldali below - kerekesc - 08-03-2012
'ValueSleuth' pid='7579' datel Wrote:VS,Kerekesc,
You raise the following question: "What will Exxon pay when IOC declares FID and places the gas resources on the balance sheet? "
Please note that the gas resources will NOT then, or ever be placed on the balance sheet. They are merely re-named as reserves rather than resources -- per the appropriate governmental standards.
The to-date COST is ALREADY on the balance sheet as an asset. Nothing numerical changes in that regard, although the exact terminology may change.
Clearly, there will be increased value when FID is declared, but it will not show up on the Balance Sheet. More than likely that increased value will show up in the market price of the stock.
What would Exxon pay? Who knows? Beauty (value) is in the eye of the beholder.
VS
You are entirely correct that the cost of the gas resources are on the balance sheet. The point that I was trying to make was that the resources will be officially be renamed "reserves." Most investors that I know will assign a much greater value to IOC with X amount of reserves as opposed to an equal amount of resources. "What would Exxon pay?" Its a safe bet that it will be a heck of alot more for reserves than resources. That is all I was attempting convey. Beauty may be in the eye of the beholder, but reserves trumps resources (and beauty) every time.
RE: Stansberry and Matt Baldali below - ValueSleuth - 08-03-2012
'kerekesc' pid='7616' datel Wrote:
'ValueSleuth' pid='7579' datel Wrote:VS,Kerekesc,
You raise the following question: "What will Exxon pay when IOC declares FID and places the gas resources on the balance sheet? "
Please note that the gas resources will NOT then, or ever be placed on the balance sheet. They are merely re-named as reserves rather than resources -- per the appropriate governmental standards.
The to-date COST is ALREADY on the balance sheet as an asset. Nothing numerical changes in that regard, although the exact terminology may change.
Clearly, there will be increased value when FID is declared, but it will not show up on the Balance Sheet. More than likely that increased value will show up in the market price of the stock.
What would Exxon pay? Who knows? Beauty (value) is in the eye of the beholder.
VS
You are entirely correct that the cost of the gas resources are on the balance sheet. The point that I was trying to make was that the resources will be officially be renamed "reserves." Most investors that I know will assign a much greater value to IOC with X amount of reserves as opposed to an equal amount of resources. "What would Exxon pay?" Its a safe bet that it will be a heck of alot more for reserves than resources. That is all I was attempting convey. Beauty may be in the eye of the beholder, but reserves trumps resources (and beauty) every time.
Exactly. Point well made.
VS
RE: Stansberry and Matt Baldali below - jft310 - 08-03-2012
The footnotes show the NG/OIL reserves of the companies. What matters is that banks will loan money to the companies based on the amount of assets they show or the number of mcfs and barrels a company has in booked reserves. So adding to the balance sheet IOC finds will indeed strenghen their balance sheet cause the foot notes appear on the balance sheet and IOC can lever those assets with bank loans to be paid out of future cash flows. To appear as footnote requires an FID from IOC's BOD. So IOC Balance Sheet will dramically change with booked assets cause everyone will know what can be loaned on those assets. Its much better to borrow money to be paid back in future cash flows to a point of course then to issue common shares which are permanently dilutive to raise money.