aed sinopec joint venture...60pct sinopec, page-52

The announcement is very short on details.

It doesnt actually say what they will receive. Why not? If the nymber was settled surely they would tell us? It may be that the buyer has said they will pay 80% of the $1b valuation? eg $480 million? Its poor form that there is so little detail.

What is AED worth after the deal? Forget the $1b valuation. Assume that they have no debt or creditors and the spare cash is there to fund the nect few years of JV. We dont need to know the $ received as its all committed and not available.

The cashflow from oil production is then the asset with value. Right now this is at 6000 bpd, ie 200,000 per month or 2.4 million per year.

Assume that the profit is $30 per barrel, then this gives the venture $72m per year. AED at 40% is about $29m.

At a conservative 7 times earnings you get a value of about $210m. With 150 m shares this translates to about $1.30 per share!

The market will reactpositively and open in the $2 range but then get forced down as reality sets in.

The deal is not yet complete.
We dont actually know the $ and the terms.
The production is performing poorly at the moment.
It will take time for all the issues to get sorted.

Price could drift back to $1 over the next few weeks as it all drags on.

I would be taking a profit and getting out early and then look for a much better entry down the track.