If the correct number needed is $500mm, I agree we shouldn't be worried about that. However, I do have an issue with some of the assumptions above. I'm not sure how anyone is going to put a $22bn valuation on E/A with this few wells drilled. My sense is that people don't pay $2/mcf for a project in its infancy like this (I hope I'm wrong!!), when everyone knows they need to sell a piece to appease the local government. And as much as I hate to agree with Bonk and his clown friends on yahoo, claiming that the PRE deal was at $3/mcf just isn't correct, imo. So much of that number is back end loaded and has risk attached to it, you cannot value it in today's dollars. There needs to be a big discount. The way I've approached IOC from a takeout standpoint, the best case scenario i'm hoping for is this.
1) Assume someone pays $1.10-$1.15/mcf
2) Give IOC 4.5tcf net at E/A, and 2.5tcf net at Triceratops
3) Pay $1.5bn for the refinery and remaining land leases
So I get to about $185/share
If someone can show me an example of majors coming in and taking over projects like this at higher valuations, I'd love to see it. But I don't think someone coming in and buying a piece of a project where a major is already involved, or where there's been far more extensive drilling, are applicable here. I'm talking about a very small company doing an early stage independent project that gets bought by a major. I'm more than happy to be wrong on all of this as it means more $$$ for everyone.
I raised this point on an earlier thread and don't think i ever got a response. But if we look at the COV deal, that looks like they got bought out for under $1/mcf. Yes, I know it's offshore mozambique, but it's also a huge field being operated by Anadarko.
If someone is willing to pay anything close to $2/mcf, I can't understand why we wouldn't sell it all. To me, the point of these things are to make discoveries and sell them for $2-$3/mcf, and move on to more exploratory drilling. Why would we want to stick around for all the operational risk?