value proposition

There has been a lot of talk about M/Cap and value, so I thought I would do my own little bit of basic analysis on the assets - (back of the envelope of course)

If you look at the reserves quoted in the quarterly and use a generic $1/mcf and $30/bbl (which are generic values for developed/discovered reserves and fits with current US metrics for recent asset sales), I conservatively get about US$30M value. That could easily rise to US$50M if Posada comes in at the higher reserve numbers quoted in the quarterly.

Without worrying about the capital raising being dilutive (money comes in to the company to offset the new shares) the story stacks up as a two-three bagger based purely on "discovered reserves/resources" (noting Posada no slam dunk just yet!).

The trouble is - there are numerous companies out there that can tout the same story (check out ETE!) and managements challenge now is to lose the spectre of the 1/2 cent dreadful and move this stock into the junior space ($50-100M M/Cap) in the near term.

I'm all for a consolidation myself. If you have good underying assets, a consolidation shouldn't matter too much and it gives some credibility as a 10-20 cent stock rather than a 1-2 cent stock.

Over and out.

DYOR