Goldman Sachs' unbooked resource values

Goldman Sachs issued an updated report on Chesapeake Energy Corp. this month, see earlier post. Within that report, they calculate a net asset value for the company. They assign low, mid and high values for unbooked resources per mcf. The most comparable unbooked resource that they assign a value to is the Marcellus Shale. The low value for that shale is $0.30/mcf, the mid value is $0.49/mcf and the high value is $0.68/mcf.

Given the success that Talisman Energy is having with their Montney shale horizontal wells, the low, mid and high values are comparable. Canadian Spirit Resources Inc.’s (SPI) potential recoverable resource in the Montney shale is 0.46 to 1.62 tcf at a 30% recovery rate. Using these values for SPI’s unbooked resource clearly shows a much higher value than is reflected in the current stock price.