VOG 2005 New Thread

I posted a valuation on the EME thread in relation to Empyrean and their gas and oil play.

This is how i see the potential in West Medvezyhe alone and why to me this at only circa £1.10 could be still very cheap to buy.

Look at the production history of the Giant Medvezyhe field of which West Medvezyhe is the """west - south west extension""" to the main giant field.

The Giant Medvezyhe field has so far produced over 52 Trillion cubic feet of gas and over 535 million barrels of extremely valuable condensate.

Up to 20% of the worlds gas supply comes from this unique gas rich region. It still has a good few years production though in decline along with 2 of the other super giant fields close by.

At over 65% depletion this would imply remaining reserves of perhaps 25 TCF and possibly 200m bls of condensate. Those produced, and still to be produced reserves at Medvezyhe - appear roughly to be almost 80tcf gas and 735m bls of condensate in that field.

That makes our hunt for 4.7tcf gas and 200m bls condensate pretty small in comparrison to our next door neighbour field and which is why I believe D&M have no problem saying 2.3tcf gas may be at the well site zone of 104 alone.
They have worked on the data along with Gazpromgeophsyika in arriving at their conclusions.

Is it no wonder that Degolyer and MacNaughton can comfortably say well 104 has recoverable reserves of at least 0.5 tcf and perhaps as much as 2.3 tcf after studying the data and logs and given the gas densities in the adjoining Medvezyhe field held by the £65b mkt cap giant - Gazprom. This is where Gazprom do a hell of a lot of their business from in these 2 main Giant and 1 Super Giant fields - already substantially depleted.

Degolyer and MacNaughton the internationally respected and one of the oldest Texan consultancy business' in the world has evaluated both the reserves on Medvezyhe and West Medvezyhe and many of the top Russian fields. We have today bought out the remaining 25.2% of the West Med field. You don't do that without a very high degree of confidence and also may i add for a company that was rubbished by the Daily Mail as being short of cash to survive. What they have got and what will become apparent next week is the announcement of the "DEVELOPMENT" cash (not survival cash - otherwise they would have held off purchasing the remainder of the field).

So to get back to the valuation - It was Ambrian i believe who came up with the discounted £3.06 for 74.8% of the 0.5tcf find.

£3 fair value discounted from £5 for 0.5tcf and nothing for the 2-300m barrels of condensate (if found). This will now be £4 fair value discounted from £6.65 as they just bought the remaining 25.2% of the field outright! Degolyer & MacNaughton have said at one well site alone (104) it could be as much as 2.3tcf which in itself would imply 4.6 times £4 = £18.40 discounted from £30.50 and thats before any of the other wells are drilled - Potential could be anything from £10 - £30/share - plus Kemerkol.

High valuation - yes you can limit your imagination, but then just look at the wealth in the adjoining field which helps make up a considerable part of Gazproms market cap.