range resources or red emperor?

Greetings Everyone,

Its been awhile since we debated the relative leverage of RMP and RRS to drilling success in Somalia.

As I see it RMP has a 20% exposure and a market cap of circa $120m after the latest jump in the share price.


RRS has a 20% interest in Somalia and has a market cap of circa $400m.

In simple terms investors are still getting four times the leveage to a Somali success in Red Emperor - -even after the stunning share price rally of the last fortnight.

Conclusion 1: Either Range Resources is significantly overvalued or Red Emperor is still relatively cheap by comparison.

Conclusion 2: Red Emperor probably will just keep rocketting until the Somali adventure fails or it gets to a share price equivalent to RRS - which at current prices implies a RMP price north of $1.00........

Don't take my word for it - you do the math.

Good luck and DYOR.