– Small-cap O&G has launched a process of selling up all of its oil & gas properties and reserves (c. 75% of all asset value).
– Contract drilling business and 50% JV interest in the pipeline will remain.
– Value of to-be-disposed properties is based on PV-10s done at much lower strip pricing (year-end 2021 and Jan’22).
– Media reports suggest disposals might be more lucrative than indicated by PV-10s.
– Trades just below 2021 PV-10 value done at much lower strip pricing.
– Base case scenario, assuming $765m from to be disposed properties (in line with PV-10 as of Jan’22, also much lower strip), contract drilling at 5xEBITDA and midstream JV at $50m, results in NAV of $82/share.
– In case of no disposals, $UNTC is minting cash and trades at 4x 2022 EBITDA including poorly priced 2022 hedges.
Exp. gain: +30% to $82/share (or +60% in blue sky scenario).
Full $UNTC write-up (free guest account required):