Just to add a note on LNG. The stuff is dangerous
to transport, too. This explains some of the lack of
development over the years into LNG resources. You have to
offload way off shore. If a big tanker would go up in New
York harbor for instance, there goes Manhattan...
Perhaps some of you historians can aid my memory. Was it
LNG that blew up in Boston harbor 80-90 years ago and
did so much damage?
Logically I figured that was the only way to
liquify gas, but why would anyone ever do it? Anyways,
thanks for that.
While we're at it, SFY does
produce/sell some rich liquid
condensates. Is this
something between NG and oil? What is the market for
great reply to Dan-completely on
Dan, one thing I suspect you may
missing in your evaluation of
Swift. What kind of
units of production life are you
assuming? A longer life probably
doesn't give you the
right depreciation tax sheild and could
be why your
cfps numbers are too low.
I concur with your
but I believe the cfps that
corresponds to that is more like $5.75/share.
why does swift deserve a
premium to multiples of
There are lots of reasons I could
cite---but just focusing on discounted cash flow analysis
methodology---What has more value,
on an NPV basis, 75 mmboe of
reserves that can be produced in 8 years or
75 mmboe of
reserves that take 15 years to produce?
these gas prices, I would
want to produce those
reserves from a
stock tank instantaneously perhaps in
order to create the most NPV.
( I do realize that
would not be consistent with a 20 PE multiple--
lets not mix PE's, earnings,
and discounted cash
flow or NPV--
they are two completely
So why wouldn't someone pay a
premium at these gas prices for Swift?
I think its
just the result of the
numbers that drop out of
the economics when you look at the value
possible with something like
8 years as opposed to a
longer depletion or units of production basis.
may be that simple.
New Zealand is just
Don't look for an LNG situation
in new Zealand. It takes first
plant to basically
use cryogenic -273 degrees
kind of temperature to liquefy the
gas, then they
put it on refrigerated
ships in very costly
kept at -273 and ship it
where they pump it into regasification plants which
and warm it back to vapor state or natural
Let me assure you....it is nothing
like crude oil when liquified.
This is a very
costly and expensive
process and the spot market for
sales in Southeast Asia is probably
not ready to
support another LNG
export project right now.
Look for Swift to produce all the oil
very valuable liquids from the gas and re-inject the
gas for some time when it will be sold a a good price
in New Zealand or to
use it in power generation,
A lot of value is in the rich liquid
condensates 1475 mmbtu in the gas.
Yes this is offshore and to the
from Swift's Kuari prospect which is half onshore,
(They can drill the wells from
This is indeed a prolific well!
I wouldn't want
to speculate that
any of Kuari wells or Rimu
be this big at 30 MMcfd. I expect
like 3-10 mmcfd/well- and this is probably a function
of the basinward pay thicknesses you could see
offshore as opposed to onshore--
though the pinnacle
reefs if big
ones might give some rates like
You could see higher rates from the
basinward wells in Kuari as opposed to others
just due to potential pay thickness
or getting a
reefal structure with extremely large permeabilities in
high energy zone of an ancient coast
Time will tell...
Hope you find this responsive to your request(and
thanks for your help on other boards):
1) FY 1999
reserve estimates DON'T include any NZ reserves (see pg.
8 annual report)
2) The range of estimates
of potential NZ reserves are from 20 mmboe to 900
mmboe (sampling of many relevant posts on this board
#1480,#1478,##1441,#1388,#1389,#1223,#1793,#1700,and many others as you will see)
3) SFY is
planning to drill exploratory/delineation wells in 8
different prospects in U.S. in 2000 having aggregate
reserve potential of 1.3 tcfe. Not all of these are 100%
interests -- See pg. 14 of annual report.
$2.20 eps estimate seems pretty sound at this time --
see my previous earnings post @ #1578. Your cfps is
definitely low -- some of the analysts are already at
The web site has the annual report and other good
info. This is a quality board with a good knowledge
base and a valuable give and take. For other SFY
qualitative factors, see my post# 1984 on POG. I'm sure
others will be happy to respond to other questions. Good
luck and regards,
i got interested in SFY the beginning of March,
company showed growing reserves, NG focus, veteran
management, not too leveraged, and a kicker in the NZ
discovery. check out the many posts on this board from
True_Truth, who is very knowledgeable about the industry and
this company in particular. my commitment to the NG
producers is based on fundamentals of the domestic NG
market, which appear to support position that NG price
will (absent a sever recession) not fall below $3.50
in the next two years, maybe more. if gas stays this
high, SFY could make $3.00 a share in 2001 even without
any contribution from NZ. NZ hit has potential to
more than double the company's reserves. so - if NZ
hit is big, the stock sells up to between $50 and
$100. if not, it sells for between 15 and 20 times peak
earnings of $3, which means between $45 and $60 a share.
but do also check out True_Truth's postings for good
technical stuff about size and value of the U.S. drilling
prospects, not just NZ. a good one.
So much talk about Swift over on the VPI board I
just had to check it out and make sure my database
numbers are correct.
Based on 12/31/99 proven
reserves only, SFY is trading at $10.90/boe which is a
significant premium to the peer group average of
At 12/31/99 SFY reported proven reserves of:
= 21 MMBBLS
Gas = 330 BCF
Equiv at 6:1 = 76
So, in order to justify the premium SFY must have
significant reserve adds from drilling this year. So, here
are a few questions:
1. The discovery in New
Zealand does look significant. Were any of those reserves
included in the 12/31/99 proven reserves reported to the
2. What is your best guess as to the NZ reserves net
3. It looks like SFY has been very
active, drilling 16 wells (14 successful) in the first
quarter. In addition to NZ, is any of this adding to
proven reserves are is this primarily development
4. I'm estimating SFY's EPS to be about $2.20 for
2000 with $3.50 CFPS. Do these numbers look reasonable
Thanks for the help. Looks like you
have a good one here.
liquifying NG depends on high pressure and cold.
can only be shipped in special ships like giant
vacuum bottles. Algeria ships some to France, and
Commonwealth Oil used to import some into U.S. but
infrastructure costs are absolutely enormous, $billions to get
any real volume. forget about it. the risk here for
SFY, if any, is that a sudden rush of NG discoveries
in NZ may depress local NG sale price. but if the
SFY plan is to initially stress oil productioon at
the NZ find, perhaps any temporary surplus of NG will
have little effect on SFY. longer term, it may be that
the whole NZ economy will become NG driven, electric
power and perhaps even vehicles. but that's too far off
to affect the stock price.