What is Desire Petroleum worth?
I listed Desire’s (LSE: DES) drilling programme in the previous article. The first well should be approaching target depth sometime in the next week or so. We’ll know a lot more about Desire’s prospects — not just Liz — when the result of the Liz well is known. For now I reckon that Desire is worth about $457m or 94p/share, with an unrisked upside potential of $4.3bn (880p). That assumes every single well in the current campaign succeeds in finding commercial reserves — which they won’t. The current shareprice is about 101p. Those are the numbers I get using the chances of P90 success from the Senergy report and applying them to the best guess volumes. This is inappropriate but it’s not that significant given the other guesses we have to make, and I’m being pretty conservative with my other assumptions. If you are less grumpy about the oil price, or the chances of success, of the likelihood of finding gas, then you could easily come up with numbers that are 50%-100% higher than mine
