Triple Energy Ltd (Triple) and BDO Corporate Finance (WA) Pty Ltd (BDO) requested that Nautec Energy Solutions (Nautec) prepare a Valuation Report for Triple’s 80% interest in the acreage held by Heilongjiang Aolong Energy Co. Ltd (Aolong JV). The Aolong JV is between CFT Heilongjiang (HK) Ltd (a wholly owned subsidiary of Triple) and Heilongjiang Longmay Coal Mining Group Joint Stock Company Ltd (Longmay) and covers approximately 2,700 km2. The acreage within the Aolong JV (Northern China) includes gas extraction rights over: Hegang Mine Area, Shuan Ya Shan Mines, Qi Tai He Mines and Ji Xi Mines.
Valuation Report for Triple’s 80% interest in the acreage held by Aolong JV included a review of the following aspects of the acreage:
- Geological Setting
- Acreage Interest
- Work Program
- Potential Markets
- Farming and Sales Deals
- Regional Deal in China
The valuation does not include any other assets or liabilities that the Aolong JV may or may not have.
Nautec provided the valuation based on the principles conveyed in the Valmin Code, Revised Edition April 2005 (Valmin, 2005), and in the Australian Securities and Investment Commission (ASIC) Regulatory Guide 111 and 112. Reserve and Resource concepts follow the definitions as laid down by the Society of Petroleum Engineers (SPE) Inc. Petroleum Resources Management System PRMS (SPE PRMS, 2011).
There were several methods that Nautec used to estimate the fair and reasonable technical value of Triple’s exploration and production assets. These include and are not limited to the methods described below, which are:
- Production and reserve information leading to cash flow analysis – present value (NPV)
- Production estimates and cash flow analysis (NPV) based on current prospects (undrilled) and incorporating expected chances of success (COS) – expected monetary value (EMV)
- Recent farm-in Actual Costs (value of work to be undertaken) and premiums or promotes (amounts above the Actual Cost of the work) paid in the permit or similar nearby permits
- Exploration and production acreage asset sales, either cash and/or shares and/or acreage swap
- Estimated Actual Cost of committed work programs (deal between permit holder and the governing authority) and operator budgetsAs a rule of thumb, an attempt was made to maintain a range between high and low side estimates of no more than 2.5 times for a portfolio. Wider ranges can be justified where uncertainty is high.