While we're on the subject of fair value calculations, here is my back of the envelope calculation based on a variety of posts from others who sound like they know what they are talking about:
The official resource estimate is quoted as 11.6 MMBOE but there are a few reasons to think that this is pessimistic. There have been suggestions that a more realistic estimate that includes the contained NGLs plus the recent land acquisitions would be closer to 20 MMBOE.
Current oil price is US$85/barrel. If (as you suggested) it costs us US$40/barrel to get it out of the ground, that leaves a profit of US$45/barrel which is AUD$60/barrel.
20 million barrels at $60/barrel = AUD$1.2 billion potential gross profit.
Currently approx 3 billion shares on issue plus 1.5 billion options = 4.5 billion total.
26c share price equates to a 25c options price for BRKOB.
Current BRKOB price is around 1.5c.
By my calculation, that means that someone who purchases BRKOB today has the potential to earn 16 bags.
Furthermore, if you run the calculation again using an oil price of US$100 then the result is closer to 23 bags. That means an investment of $50k today could be worth $1.15 million in a few years time.
I'm not saying that is the most likely scenario but I think it is certainly a possibility if everything goes our way. To me, this stock has a lot of potential upside and relatively little downside.
BRK Price at posting:
2.5¢ Sentiment: Buy Disclosure: Held
(20min delay)