re: Ann: Operational Update - Frances Dilwort... Kenpitt,
Agree. Good buying opportunity. My broker thinks it is a US investor that took up shares at 10 cents. Who knows what trouble they are caught up in! We had another big shareholder as a forced seller a while ago forcing the price from the 70's back to 63 cents. This is just another buying opportunity.
The release today was very pleasing. Light oil - just what I like to hear. Flows nicely as it has a low viscosity. Just wonder how each well upgrades the P1 and P2 reserves?
From Patersons
"The reserves estimates suggest significant upside in reserves at year end as a result of the targeted 10 well campaign. Based on the proposed reserves rules in would not be unreasonable to assume that 60 wells could reside in the proven category at year end. Suggesting a 1P figure of ~ 10 x this value. Risks to this are that less wells are completed by year end and the figure needs to be reduced by an unknown 1P value for the Oyster Creek and West Wharton assets although believed to be negligible. Our estimate on this basis is that ~12-13mmboe of 1P reserves could be booked as at the completion of the 10 well program. On a 2P basis we believe it reasonable that the majority of the proposed forward 5 year program (97 wells as at the end of 2010) could be booked as 2P. That is, a remaining 37 wells booked under the possible category. Hence the majority of the current 3P reserves could be booked as 2P."
Looking at the report, with P1 reserves as $20/bbl, P2 at $10 and P3 at $5/bbl that gives us a valuation of $225M which is pretty close to the current market cap (sellers dumping excluded!).
So increasing the P1 to say 12mmbbl and the P3 as P2 (ie 23 mmbbl) and replacing say 20 mmbbl of P3 reserves increases the market cap by $500M. So that's about $2.40 a share.
Do your own numbers, but the back of a matchbox usually works! Hang on for the ride. (No, I'm not a broker)
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