The Falklands: Sodra v Desire Petroleum
Sodra has 100% of 2,2 billion potential barrels = 2,2 billion barrels
80 million shares --> 27,5 potential barrels per share
Desire has 25% of 2,7 billion potential barrels = 675 million barrels
47.3 million shares --> 14.3 potential barrels per share
Sodras market cap is today US$ 92 million
Desires market cap is today US$ 235 million
This means
1 potential Sodra-barrel is worth $0.41
1 potential Desire-barrel is worth $3.50
Conclusion: 1 potential Desire-barrel of oil is worth 8.4 times more than 1 Sodra-barrel !!
BUT: Desire also has Tranch I & L, but they haven't shot the commitment seismic yet, and I
and L are NOT included in the 1998-1999 drilling programme. These two Tranches are
geologically less interesting, that's why Desire has no working commitment at all. If
commercial oil is found in any of the other Tranches, then of course I & L become more
valuable.
AND: If no oil is found offshore The Falkland Islands, shares in Sodra will then be
convertible into Lundin Oil shares during October 2001, 12 Sodra for 1 new Lundin Oil, for
details see lundinoil.com . Lundin Oil's share price is $4.6
today, 1/12 = $0.38. This means one Sodra share is worth $0.38 = 1/3 of todays share price
of $1.14, even if not one single barrel of oil is found.
Mathematically, the structure of the convertible means that if Lundin Oil shares, at the time
of conversion, are worth SEK 108 = US$13.80, Sodra shares would have a value
corresponding to todays share price of SEK 9 ($1.14). This is a very reasonable assumption,
Lundin Oil has 264 million BOE in Malaysia and Libya coming on stream during 1999/2000,
oil production will increase from today's 14000 bopd to 65000 bopd by 2001. Share price
should quadruple before October 2001 even without any new oil discovered. Lundin Oil will
probably start trading on the London Stock Exchange during 1999.
Sodra is floating on London AIM on July 1. It looks like a safe bet. It's probably much
cheaper to buy Sodra on the Stockholm Stock Exchange now instead of waiting until July 1
and buy it on AIM. |
