I’m not sure that the reception to the J55 news was that...

I’m not sure that the reception to the J55 news was that underwhelming. JPR’s still a pretty low-profile stock and undoubtedly undervalued by any reasonable measure, but I suspect that many of those in the know had bought into the J55 drill on a justifiable assumption of success and this drove the rise in the sp since about Sept 10. Trading on AIM when the J55 news came out was good by JPR’s standards, though buys were accompanied by some profit taking by those in at a lower sp (which I thought was largely pointless as there seems little chance of getting back in much lower and there are further sp drivers to come near-term, as per my recent ‘news’ post). Given that J55 was a find, but that we have as yet no idea of important details such as flowrates, and perhaps more importantly confirmed volumetrics in a CPR, I wasn’t too disappointed by the sp reaction initially.

I suspect that reaction to another strike at J58, which I feel is likely, might take the sp up another leg and see JPR around the 65-70c mark. For me, however, the really big drivers will be the CPR and confirmation of what will happen by way of drilling and production after that, and how this will be funded (ie how much from production & from where additional funds will be sourced if required). If we get a CPR in early 2013 giving, say, 45mmbo 2Ps or better, which seems pretty plausible, and if there’s funding available without too much (or any) dilution, then you’d have to think this will catch the eye of investors and perhaps take the sp up to around the 90c mark. That still looks very cheap for 45mmbo of 2Ps, with production of hopefully close to 2k bopd and funding in place (assuming around say 170m shares in issue at that point, that’s only equivalent to around $3.4 per bbl of 2Ps, which still looks dirt cheap to me, especially given the further prospectivity of B31 & the extension). Curiously enough, I think a sp around the 90c mark would just about trigger the PRP shares to vest to the directors, so I suspect this sort of scenario is fairly credible.