do the numbers stack up? check it out..., page-19

Posted on another forum but i thought it related pretty well to this thread.............................

Wonderlick, hasn't anyone ever taught you that book value is meaningless in valuing O&G companies. You have to go to the balance sheet and replace the book value (value after recorded depletion expense) with reserve valuations and estimated leasehold valuations.


Now that Samson's rights offering is completed they have 58.5M ADS shares o/s and have reduced debt to $11.7M. These 58.5M shares priced at $.79 equate to a market cap of $46.2M.

This $46.2M market cap combined with $5M cash and $11.7M debt currently has them priced at a Total Enterprise Value of only $52.9M.

Samsons previous proved developed producing reserves were mostly gas and had a PV10 value as of 9/30/09 of $19.045M based on 9/30/09 quarter end pricing of $3.085. Based on the year end gas price of $5.535 their year end PDP PV10 reserve value should be close to $34M.

Therefore, Samson is currently only priced a little above the above value of their proved developed producing reserves and is receiving very little value for their probable and possible reserves and their very valuable vast leasehold acreage positions.

Samson's Bakken acreage is only a small percentage of the company's overall acreage position and growth potential, but is VERY important from an immediate cash flow perspective.

Samson should see fantastic results and some major upside from their Bakken participation, but they are limited to 30% ownership in five 640 acre spacing units and 10% ownership in one producing well on an additional 640 acre spacing unit. Samson expects to participate for 30% in three wells on this acreage during the first half of 2010.

With infill drilling each 640 acre spacing unit could eventually have two Bakken wells and two Three Forks formation wells.

Samson also has additional near term upside from their shallow Texas onshore Gulf coast prospects offsetting existing producers and MAJOR long term value from their extensive Baxter Shale and Niorabara/Pierre Shale acreage.

Samson has 40,800 net acres in the Wyoming Baxter Shale and 50% ownership of 100,000 net acres in the Wyoming DJ Basin Nirobara/Pierre Shale each of which are becoming very valuable.

Note: The Nirobrara is and oil shale play very similar to the Bakken that has recently been seeing some major activity from EOG,CHK,XTO and other major shale players.

Samson has also contributed 6,500 acres of their Baxter shale to the Rubicon Unit with Devon. It appears higher prices and the new frac technologies will prove very beneficial for the long term value for each of these shale formations just like it has for the Bakken.