i liked your comment: if it flows at 8mmcd you'll jump aboard. EXACTLY. this is when everyone will jump aboard, so you better be quick. 8mmcd and this company has a very handy cashflow that justifies a much higher share price. sure other companies have higher rates ... but not every company is located next to a pipeline and owns 100%. once the prove this gas field up the reserve estimates come into play. drill 40 holes with a payback time for each of two years and suddenly to profit margin over 15 years looks sizeable.
so how do they get to 8mmcd initailly and get rerated?. well para3 is flwowing now from a half frac at the bottom of the well. 1mmcd they said. let's say they eeke another 1mmcd out of that bottom and lets not even allow further upside from the rest of the pay they had down there. that's 2mmcd right now..
two further zones higher up yet to frac. the middle one always looked to be the best. 2mmcd for each would be handy? can they get it ? maybe not so lets go for a conservative 3 and a total of 5mmcd for para3. That's about a 7cents per share revenue boost right there.
lets move to para1 and rework. watch them get 3mmcd based on what they've learned ... there's your 8mmcd and a rerating based on a revenue of some $6million net a year after taxes royalties etc are paid.
then we factor in another 10-40 wells ...
that's the plan. like i say. dont take too long to buy when they tell you they've got 8mmcd out of their completed and paid for 100% owned two gas wells.
GDN Price at posting:
8.8¢ Sentiment: Buy Disclosure: Held
