numbers and tea leaves, page-39

Hi Rowser, Meat & all MAD posters

I would agree with that MAD is not (necessarily) overvalued at its present market cap, and is highly leveraged to oil price (a good thing IMO).

Short form agreement that at a 20 times multiplier for P+P reserves MAD (fully diluted) is about $3.80 or so, less obligatory 50% haircut for any number coming from HC poster.

Just for grins - keep the $3.80 in mind.



Long form agreement, is the thorough analysis of MAD's reserves and whether a 20 multiplier (i.e paying $20 bblo now for the reserves stated) is appropriate (which I don't think it is - should be higher)

This morning's "gift" for me, which I'll use as reference point. Not relevant to MAD per se, but relevant wrt to calculation of value based on 2P reserves. Gift because I own their shares and about bloody time they were recognized. Interestingly jumped about 15% today on the reserves (not as impressive as MAD's 30% one day jump when it annouced its reserves)

http://finance.yahoo.com/news/Second-Wave-Petroleum-Inc-cnw-1704867253.html?x=0

Kinda long, but net net, yesterday SCS (SCSZF on OTC market) was at $3, today at $3.50 with market cap around $270M.

With 11Mmboe 2P reserves equates to roughly a $23 Bblo multiple. After annc, RBS capital markets says proposals being solicited at 50-70% premium -- which would value roughly to $5 per share or around $35Bblo multiple.

That $40 isn't crazy as the reserves calculated are only a fraction of the rest of the asset. Given their current "Netback" after everything is $49Boe the rest of company is free.

Using the other measure of boepd, exit 2012 highlighted to be 4,000 - 5,000. At the $150K/flowing boepd that gives $450M at low end so the 2 valuation metrics converge.



So, if anyone has been paying attention, MAD measures up very nicely in this comparison and if valued on 2P reserves of $35, you've got $2.5B company and a $6.50+ price.

Better not dither around too long before I buy - just had to do it after such a run up & oil trading where it is (although it has dropped a few bucks last couple days).

Regards,