Re ARQ, AWE, AYO, HDR, the main factor in the valuation of these companies is reserves, proven, probable and potential.
ie future capability of sustaining a long term cashflow,
This is the question mark over PSA at the moment, brilliant cashflow now but some concern over how long it will last before it all gets consumed again proving up more reserves.
There was some disparity in the annual report between the independent expert (11bcft proven and probable) and PSA estimates estimate of 16bcft recoverable.
If PSA are right and their previous 90% success rate is maintained they can still sustain a much higher cap. Its worth noting that when the shares were $8 they were talking 240bcft proven and probable and 1 trillion cft potential reserves net to them in their permits and at the moment are talking 16bcft recoverable reserves and the figure of 100bcft potential was mentioned I think at the AGM a year ago (or 2).
I suppose if you make that comparison the current price looks about right! If the market started working on short term cashflow only then they could go a lot higher, else it will have to be based on more exploration success (or anticipation thereof) and continued high production rates (will the other zones flow at the same rate as the one they have just finished??).
