Bluegoose, if the recent Wilson report is accurate, and April production was 1196 bopd, and assuming thats a net 1080 bopd (i.e. avg 90% WI over all wells factoring in the 33% for the 12 GS JV wells), and a mcap of $270, cash of $50M, then the EV/bopd is $204K.
Thats at the high end of fair value imo (faif value being $100-200K/bopd, and cheap being < $100K/bopd) just based on current production. The fact that its at the high end of "fair value" indicates to me the market is valuing some upside in there. There are 3 obvious factors it could be:
1. Continued production growth, given the company has managed to turn production around 2. Positive results of the high impact tests 3. The reserves valuation
Imo the market being a harsh discrimator, and 1 bo in the hand being worth 2 in the bush, I would say its valuing in some production upside from shallow dome drilling rather than high imrpacts of reserves value.
Of course, conitnued shallow dome production growth will eventually validate (or not) the reserves value so the longer production grows from this program, the more the market will start ascribing value to those reserves. The high impacts are an indepent factor from those other two, and will totally depend on results achieved from this program.
Cheers, Sharks.
FDM Price at posting:
60.0¢ Sentiment: Buy Disclosure: Held
