Not that I necessarily trust broker valuations Fenbury, and with this company in particular one must be mindful of the relatively low oil price atm, but these two 88E broker valuations:
also give some good insight into what 88E is hoping for at Icewine. They also give some idea of relative valuations based on other unconventional tight oil type regions at Eagle Ford (Paul Basinski/Burgundy X/88E's partner at Icewine, territory) and the Bakken. Here is where the risk/reward comes in with a current valuation of around $20M undiluted, 88E is only at the beginning of starting the push towards $50M which is what Aurora was valued at based on their 22,000 acres in the Eagle Ford when they did their Farm-in deal. Aurora ended up with an MC of $2.4B when sold to Baytex. Interestingly these guys (Aurora) r now buying up stressed (due to low oil price) unconventional projects via an unlisted private entity
Note the final achieved acreage valuation based on the buyout deals of the likes of BHP/Petrohawk. This ended with BHP paying $15000/acre to PetroH. If a similar deal was done with 88E this would be a 60X multiplier on Hartleys current implied valuation of $253/acre for 88E. Now this is certainly not to say this is where 88E's sp will end up. There r MANY risks to overcome as yet such as:
* A Farm-in partner/deal (at what dilution to current MC?)
* Does Icewine hold correct rock fracability, oil type, etc.
* Logistics risks, which should not be overlooked on the slope, recent flood issues etc.
But then I guess this is where one is taking on the risk at such a low company value, versus the reward of a potentially successful unconventional oil play such as in the Eagle Ford.
d.
88E Price at posting:
1.5¢ Sentiment: Hold Disclosure: Held
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