I’ll be back in at some point. LOL – FOMO almost got the better of me but the drop from 1.3 to .08 cents got me thinking of a few things.
What’s the theoretical lowest can this go? With absolutely no cash backing, if things go bad, zero is the theoretical bottom.
What the theoretical upper end if things go good? Whatever shareholders are prepared to pay seems to be the answer on just feeling. Don’t know future cash, don’t know holding of the field, 3D has not been done, no Percentage calculation for Success. We have a figure of 1.3 billion barrels estimated from PCL – will that go up or down after 3D?
So what do we need to know to start putting real figures together rather than the “I feel its going to 5 cents after we get a partner”?
What cash holding will we have after any free carry? – 30 million means a Cash backing to support .004, 70 million means a Cash support to .01. Any price above that is the premium based on success so to me 30 million cash might not move the dial a lot but 70 million might mean we’ll settle at a new higher level? If they find no oil – The cash backing is where your SP will fall to.
How much premium will people add to the price above cash backing? Depends on percentage retained on Farm out (plus any hype that can be generated). If they are left with 30% you’re going to get a better premium than if you’re under 20. But that % will allow you to calculate return based on oil found. Suddenly you’re not guessing with too many different variables - just what you will find.
Timing:
FOMO gets stronger the closer you get to drilling although a number or holders will pull out or reduce holding close to drill results.
Farm out – Now to a couple of months (good result could re-rate the stock)
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