going to 80c , page-16

absolut-advance -
re: "what is your earning breakdown for each well"

I am basing my estimates with these assumptions:

Total shares fully diluted: 171 million

Gas price $6.70/mcf
Condensate price $85/bbl

PE = 10 (expecting >15yrs production like nearby wells) for eventual flow rates from these wells (ie about 1yr+ into production, based on the fast that the nearby wells to Jet3 gave about the average of their production over the first 10 years around about the figure at 12-18 months post start of production.

YPU-1:

I am assuming YPU-1 will be producing about 800mcf/d gas and 25bbl/d concentrate at 12-18 months. NRI 31.3% so 250mcf/d and 9 bbl/d worth $2440/d to BUR.


Rocket2:

current 4.5mmcf/d I'm assuming a fall to 1.5 mmcf/d at 12 months (though could be wildly wrong either way with this estimate). Likely 50bbl/d concentrate:

BUR NRI is 13.25% so assume 200mcf/d plus 7bbl/d to BUR worth $1935/d to BUR


Jet 3:
Likely to be the best of the three based on local wells. Assuming an average of 2mmcf/d (more likely to be 3 mmcf/d) plus 80bbl/d condensate.


NRI to BUR of 29% equals 900mcf/d and 24bbl/d worth $8000/d

Total income $8000+2000+$2400 = $12.4K/d = $4.6 million per year once in production. These wells are already paid for so I'm not subtracting the cost of drilling and completing the wells from this, and completed gas wells cost little to upkeep.

This suggests a MC of about $46m at PE 10 giving $46m/171m = 27cps when all options converted and if no more wells are drilled/re-worked - though not that option conversion would of course provide finance for several more wells so income would be significantly higher than this once options are converted and the money put to good use.

I'm giving the intrinsic value of the company (cash, infrastructure, spec potential of future projects) of about 20c, which thus adds up to 47c for success at the first three wells (2/3 of the way there already).

I purchased BUR with belief that the real spec value is more like 40-80c in addition to these three wells . I personally think that the actual value is more like 50-60c now and adding 20c if Jet3 is successful - so My personal belief is that a fair price for this is about 80c if Jet3 is successful, 60c if not. Much of the low price at the moment is due to the market greatly devaluing the spec value component of market cap in the wake of the subprime ripple.