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Pjhony

I am no genius, the things i have posted should really be common knowledge to anyone investing in oil and gas shares, this is my area where i have the greatest amount of knowledge so i only invest in this sector as investing in a gold miner would be totally different and if in am not %100 knowledgeable on a stock or sector i simply wont invest in it.

The problem with MAD is there reserves reports are very vague at best, which makes it hard to determine an accurate valuation as the report does not contain the very basic data that should be reported -

- EUR per well
- NPV
- Amount of land assessed
- Amount of PDP/PUD well locations
- Amount of Probable well locations
- Recovery factors

With out knowing these parameters it is hard to determine an accurate valuation on MAD, something that is odd is the fact the company has no NPV(10) figure for 1 & 2P reserves booked, most companies will have this.

However, if MAD can substantially ramp up production in the next two years (which i think is inevitable) then is see the discount that the market is currently assigning MAD disappear due to the Reserves to Production Ratio coming down to an acceptable level. If MAD can show the market in the coming months that it can ramp up production, then is see MAD being trading at a fair price to 1P reserves -

28,100,000 x 13.50 per bbl = NPV(10) $341,415,000 or SP of 0.91c

Reserves upgrades will be inevitable and the market may start to factor in an increase to 1p reserves as we approach mid year, which will probably see MAD trade over a dollar. But if anyone does any reading on the methods they use to calculate there reserves one would be very sceptical. But in the mean time i believe there is plenty of money to be made on MAD as we will only see if there reserves are over stated in many years, as wells produce longer. You also have to remember that this field is ~100 years old and has been re drilled every few decades only to be abandoned due to economic factors IMO using a current recovery factor of %29 which in turn is a total recovery factor is %49 is very optimistic, time will tell.

Using a DCF model to value a company should only be used when there is a high degree of confidence about future cash flows, as a DCF model is only as good as your input assumptions, a wrong input can cause your valuation to fluctuate wildly.

I noticed you just moderated your own post, "My Guess $1ps by Friday" i highly doubt that :)