It can't actually trade at .8c unless they do a consolidation. The lowest it can go is .1c on the ASX.
Risking 50% is correct perhaps, but I am not looking at a hopeful exit of 50%, more like several times that, but that is just me. The main thing that interest me in BPH is PEP-11 (although it was the MM announcement that first got my attention). Even with a minority shareholding in Advent, the target of 13 tcf is a true monster. Obviously it's just a target, but if Advent drilled and hit even 2-3 tcf the company would likely be worth over a billion dollars. I only say that in comparison to some other gas explorers who have hit in the last 12 months, and their finds were 2-3 tcf from memory (you'd have to read my older posts for the names as I can't remember).
If you want to play with easy numbers, consider that they hit, for example, 3 trillion cubic feet. With BPH holding 27% in Advent, what would you expect that to do do BPH's valuation if they're currently trading at $6m?
Obviously it'd be multiples of that, whether its 3x or 10x, I couldn't possible guess. It's a hell of a lot more than 0.002 though, and that's at 3 tcf. Remember they are targetting 13 tcf.
Before Assailed hijacks the thread with "if the tenements are that good why weren't they drilled ten years ago," keep in mind that new discoveries come up all the time across all resources, and no matter how prospective a region might be, there is big money and big politics at play that can prevent things from being progressed. That is why I think it's significant that the JV has been disolved and a settlement reached with the former partners, as exploration couldn't possibly go ahead due to their legal problems. Every single big find starts out as nothing and as I see it, you have to be in it to win it.
If you're after a less risky punt then there are undoubtedly better options on the ASX. I wouldn't suggest anyone buy it if they aren't looking for a high risk-reward potential and there are wayyyy safer stocks that are more liquid as they trade in higher price ranges. It suits me personally though which is why I've taken a slice.
I invested in the old TPT (now 88E) years ago who were drilling what would have been the largest oil find in years off the coast of Morocco. It was a total duster and I copped an Assailed-class hit of over 90%. Happy to wear it (well, as happy as could be expected) because I've wasted more money on dumber things than the potential for a giant payoff if they did hit. I've literally spent more on booze than what I lost on that opportunity.
I see BPH in the same light with a few key difference. One of those differences is that it's so early in the more recent developments (ie. post-resolution of legal issues) that the stock hasn't really run yet in anticipation which does normally happen once drilling/funding/JV is announced (that happened big time on TPT/88E which is when I bought in years ago). The other difference is they have other ventures, namely their medical assets and the new MM asset, so it's not a complete loss if they do miss.
You're not paranoid. You're being sensible at this end of the market. IMO you shouldn't invest money you can't afford to lose in the spec end of the market because it hurts like hell if they miss, but man it rains when they work out.
Regarding your comparison to a $1 going to $2, it's been a huge year for a lot of blue chips. Look at CKF, APT, ASL, FMG, NCM. All large-cap stocks that have doubled or come close to it, and these are worth hundreds of millions if not billions. $1 to $2 is a stretch because companies trading in that range normally have maaaaaassive market caps, but the above short list is evidence that it still does happen.
The thought of BPH trading at .5 - .6 is pretty realistic to me given what they're cooking right now.
Don't let me talk you into it, these are just my thoughts. DYOR and don't punt what you can't afford to lose.
BPH Price at posting:
0.2¢ Sentiment: Buy Disclosure: Held
(20min delay)
