costings v production, page-19

Wow, I'm being accused of bitterness and hatred! Far out! Haha! Asking questions and wanting to understand and learn makes one bitter and full of hate? Wow! :P

The more I look the more of the same I get. It's hippy stuff. Don't get me wrong, I'm educated, I make money, and I also consider myself a bit of a hippy too, but I'm not going to throw money into a hole.

2BOPD or 50BOPD is irrelevant. What's relevant is cost of production vs. cost of sales being economical. It doesn't matter if your 2BOPD lasts forever if your costs exceed your revenue.

I invest in oil because it's a critical resource and yep, it's running out etc., but that's not to say we're going to have a smooth increase over the next 5-10 years. It's also not to say that this is economic now or will be in the near to medium term. Yes, this is an environmentally beautiful piece of technology, but is it going to be economical, and, is it going to be competitive with equivalent technology? The second part, yes, I think it does look good (but even that's very vague), the first part... I really can't tell. The claim of being able to produce for $40 per barrel is a concern. No doubt they're giving us a generous estimate rather than a conservative one. Are we going to be able to sell the oil for as much as conventional crude? There are oil companies producing the old fashioned stuff for much less than $40 per barrel.

Okay, for argument's sake, let's say it is highly economical. What share price does that warrant? 30c? 3c? $3? $30? 0.3c? Do any of you have price targets? If so, are they just based on "Oh wow, it'll be ten times its current value in a year!" or is there any reason to your rhyme? With an oil company I can calculate it by saying they have $x in the bank, x acres of land which can produce x barrels per acre at a cost of $x per barrel over x time. Using this information I can get some grasp of what the company is worth. Often it is a case of 'we've leased the land and will invest $xmillion on test drilling, we need x barrels to break even and for ever barrel above that we make $x per year adding $x to the company value equating to $x per share.

All I see here is "This is great stuff! It's worth lots! You should buy in because it's environmentally great and we're helping the planet and the planet is running out of energy!". Okay, lovely, but can anyone saying that give me any sort of estimate on the company's future value with any sort of explanation of how they came up with that figure? These hippy companies with feel good stories to sell usually end up fizzling because in the end, feel good stories don't make money, economics do, and when I can't see any rationale for the economics of a company I get suspicious about its future.

The question was asked, what would I need to be convinced? A business model with more than vague concepts. Operating costs per container. Details about the end products. Some way to put a value on what this company is worth. If the company is not doing anything to try to show me, I can only assume it is worth less than the current market cap.

I'm not bitter or hating, just being rational and inquisitive. I'm not going to put money into something I can't quantify.