Hi Creditdumbness, oops xtrenelivin,.Nice to see you are...

Hi Creditdumbness, oops xtrenelivin,
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Nice to see you are calculating, and it could be seen to look like that on first shallow impression , but their are two new wells pumping oil for the next 20 years.
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If SHE opens 4 more wells this year and then does no more investment you will see the cash pile up taking it far past the current market cap.

If she open 4 more wells next year as well then will see cash accumulate linearly as per the graph below.


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X axis is months, y Axis is accumulated cash.

Lets look at possible scenarios

1) IF SHE is opens up 4 wells this year, and 4 wells next year with no more investments.
then as As you can see the cash piles up ,once the wells are open its Profit before tax will be around 12 million / year so we it could be holding 80 million in cash in 5 years, that is 1000% over 5 years.

Once their is continues income flow it becomes possible to do a discounted future cash flow model which some investors will do. This is becomes evident as Stonehorse Enterprise value to Earnings ratio changes. i.e. P/E become relevant.
This will increase the market cap even further

OR

2) If stonehorse opens up more wells every yer then the gradient of the curve increases and it starts looking like exponential growth leading to much larger long term value though bumpy initially providing excellent accumulation opportunities for long term investors only.

OR

3) If stone horse stops investing after it has 4 new wells this year then SHE will be making 6 millions per year ,so after 3 years will be sitting on 15 to 18 million.

OR
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4) Even is SHE sits on its laurels and does no more investment the cash will accumulate to above its current market cap quickly taking its cash holdings over its current market cap, so they will recoup their investment money, taking it to over 13 million and it will be generating additional revenue.


The best strategy is to open more wells so as to escape its fixed cost, and i believe this strategy will become even more evident during 2024.



Notes
A) Also these new wells will produce for over 20 years, though the board only models 10 years production ,and are not short term high impact wells.
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B) Tax is not factored in , royalties are, operating costs are, cost of goods sold is. But SHE does have a very large undrawn tax credit allowing it to offset all tax for the next few years.

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Which ever way you spin it , SHE is going to grow and with the earnings,current cash position and in my view very low risk.
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The only risk is if the price of its products collapses which i think is not going to happen.

Its good to see an intelligent question asked by Creditdumbness or xtrenelivin rather than personal attacks on the CEO.

More discussion like that would enrich this channel like the BRK or GRR or ATP channel ,where they do similar analysis.

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To the background of all this is the multiple indications of dividends, once these happen then investors will feel confident the will get a quicker return and we may see the market cap increase a few hundred percent like ATP, GRR and many others did after the initial dividend.
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Just have to be patient and not worry about the short term share price unless once is a short term trader.


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