In the very long term, intrinsic value does get priced. O&G stocks get priced on wellhead flow, P1 reserves and CASH if nothing else.
IMO the value of O&G is a lot more tangible (thus less speculative) than say the value of shares in a zombie bank (large or small) with unbooked trash debt derivative exposures, high cost FX exposed loan books that are overweight on over priced unproductive, interest rate sensitive houses.
Market failure occurs where there is insufficient play money to quickly price fundumental news. In SSN's case long money is not prepared to take a punt on a binding contract with a large player (the size of EOG, KOG of Chesapeake) going through. THESE COMPANIES COULD PICK UP SSN IN THE BAT OF AN EYELID if they wanted to. Their money is good! All SSN has to do is deliver the bulk of the leases to get the lower end offer with more if they get the exploration unit and some drilling kick stated.
I have no idea where the SP may be in a few years time, but I do know that SSN will be 1) priced by a cash in bank valuation in a few weeks and 2) priced comparatively to it's also underpriced (lower mid tier) peers within a few months.
IMHO point 1) means an extra few cents on the SP for a nice trading gain. If all goes to plan, point 2)will deliver an extra few cents . . . so maybe 2 bags total by years end without much risk. IF GFCII hits hard (and it may not) SSN will not IMHO be valued below current levels assuming the sale goes to plan.
Market failures like this present easy low risk money for traders and speculators. Nothing, including cash is risk free, and SSN is unliley to create instand wealth out of a $10 or $20k hold. Just a nice return.
cheers
cheers
SSN Price at posting:
4.9¢ Sentiment: Buy Disclosure: Held
