cue - meo doubleplay?, page-2

Yoshi,
valuations dont mean anything because MEO is not performing because of them... MEO is performing for this reason below...

Look mate... I know alot of people that are very confused (as I am) about the situation...
here is what a mate emailed me

"
did you get the info on MEO from small cap
investor...Anyway one theory on why MEO has soared (and also have a look at LNG)
is that these tip sheets recommend a share-and predict outrageous
future share prices! and then all the mugs buy them --then when the
volume suddenly rises all the day traders get these little alerts on
their computers and start buying and then a buying frenzy begins--it
has less to do with fundamentals than heard mentality...
"
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firstly,
if you are being suckered into a phoney valuation for an oil stock make sure, and most importantly look for two clear things in the valuation...

1) does this valuation take into account the big risks drilling, ie is high chance of failure factored into it?
2) does the valuation price the discovery at production stage, instead of appraisal/discovery stage...
This is a major difference where the project is priced...
because a 5 year development with a 15% discount rate will mean that the project will be worth only 49% of the future value (based on discounting)...and that future value is being said it PV terms when it is not...

1/(1.15)^5=49%

^= to the power of...

so basically, some valuations we are seeing on the market are taking that future value (production stage) and not discounting it...we have to bring that future value back into a present value term by discounting it...
A fairer discount in the oil and gas industry is 20% ( high because this industry is very risky)...

discounting for two reasons...
1) the return you need to get for being compensated for investing in a risky project...
2) return you could get if you put that cash at bank, or opportunity cost for example...

This sort of behaviour (market hype) is most welcome if it brings us returns (regardless if they are real or not), I am very cautious because I have been watching MEO for 2 years and I have seen very dubious behaviour...
I have said the reasons why, over and over on the MEO thread (going way back)...
so, im not even going to go there...

This thread is quickly becoming swarmed by MEO, and Artemis enthusiasts...
I prefer the old CUE thread where there were only a few posters who talked about CUE for what it had, and not what it didnt have...
Grahamc, Patpat, helyeah, entropylord, NZ oiler...
and more recently stefanis... and other posters that would pop in from time to time... Trackers...
sorry if I missed anyone...

exploration wells come and go, but real assets do not...

we dont have an Artemis discovery!... its as if the market is valuing one into our market caps... or, its as if the market is derisking Artemis to the point of high chance of success...
its not right...

Im not going to talk about Artemis again... not until we get close to drilling anyway..
bye for now... I will put some numbers up next week on our REAL assets...

.^sc