It's difficult what part of the price fall (if any) to ascribe to any attack, planned or otherwise, but there are a few deal items that I think a good many of the longs exepected more off:
- The $/mcf is simply lower than what many longs (myself included) expected
- The long time to the LNG plant. Many (myself included) expected a deal with Exxon and relatively rapid gas processing.
- While this is open to interpretation (in more than one way), the way the deal is structured was communicated it seems to leave open considerable uncertainty about the size of EA and GLJ's assessment of it.
Against that, we have the pleasant surprise of a 30% stake in a future LNG plant, which was much more than many (myself included) expected. The time horizon for that is pretty far out (I included zero value for this in my SA article), but this is very substantial and I think it's something institutional investors (more patient capital) like.
The appraisal of EA will be crucial, as it seems to me the market is factoring in a considerably smaller resource than the current GLJ estimates, and there some obfuscation might very well have taken place (the Total PR), although not necessarily in that, but in subsequent "interpretations."
So, potential upside should come mostly from the drill bit
- EA appraisal
- Drilling new prospects
Good job we're having 3-6 of these drills running simultaneously pretty soon..