whats it worth......, page-5

Firstly, why can't you people post decent information with some logic to back up your statements? Do you always have to rely purely on hype and ramping? It's so boring.

In support of Gordon Gekko, and in response to MME, without bias or prejudice...

The mine as it stands… hypothetically anyway :)

Barrels/Day: 10,000
~Current price/Barrel ($US): 47.00
~Current price/Barrel ($AU): 59.80
Therefore SALES/Day: $598,000.00
Therefore (assuming 350 days of production per year),
Yearly sales == ~$210M

Historically barrel prices are extremely high so we could expect a retrace over the next few years, and we might also discount the earnings to current year earnings (which would be prudent) etc but for the time being lets assume barrel prices trend generally upwards over 50 years offsetting the time value cost of money.

With sales of AUS$210M/yr a 50 year mine has SALES of ~$10.5 Billion AUSTRALIAN dollars

Now – that is sales, not earnings (ie. Profits). Lets assume the company does extremely well and makes 25% profit (hands up who thinks that is likely???)

So 25% of AUS$10.5B = AUS$2.6B (...over 50 years). Now – NEO only has a 25% stake in the well, so the AUS$2.6B is now worth AUS$654M in total.

Assume ALL of the money is returned to share holders equally every year (again, highly unlikely), that is AUS$13M/year to shareholders. This, divided by the number of shares on issue (not counting options) 372,024,748 = AUS$0.351/share dividend/year. Multiply this by a healthy 20 times (again, fundamentally over valued but definitely likely to be achieved for most earnings positive shares) and you get a valuation per share of AUS$0.703.

However, with this potential upside comes the likely hood that the options will be converted. There are a total of 290M options out there. So – on a total of 662M shares on issue, the dividend/year is now worth AUS$0.01977 (lets say AUS$0.02/ share for arguments sake – for all the rampers and HOPERS out there:)

A valuation at 20x earning (ie. A PER of 20) give the shares a value for 50 years of production of AUS$0.40.

Now you can spreadsheet those figures and tweak them, look at them as generously as you like (I think I was pretty generous about it already) and you will still find your $/share valuation.

Now of course, the value to YOU, the share holder, might only price in the return you would get if you held for x number of years. I personally wouldn’t be counting the full weight of a 50 year valuation in share price but you can do some of your own maths.

Value it how you want – but the company has to find, then produce and sell gas and/or oil first to be genuinely worth anything. Is the company worth AUS$17.5M right now? We all better hope so or were all holding a potential dog :) Personally, I think in a YEARS time, after identifying a mine as described above, I would halve the AUS$0.40 valuation and THAT would be my own valuation of this mine... if it existed....

There is a guide for a valuation :)

Appendix A: Shares on issue

Fully Paid: 372,024,748
With options at an exercise price of $0.05/share it is going to be hard to say if they will all be taken up.

7,433,500 partly paid shares also on issue,
281,035,334 of the options exercisable at 5 cents on or before 16 February 2006
3,000,000 of the options exercisable at 5 cents on or before 1 December 2004
5,576,589 of the options exercisable at 8 cents on or before 30 June 2008