The time has come for the updated reserves report from Nash...

The time has come for the updated reserves report from Nash dome.

The (MAD) question is, what are we expecting...?

To have a good discussion about this point, I'll provide some colour. When MAD listed, it had the following on Blue Ridge:
- 7.8m 1P
- 25.6m 2P

It now (after 2 subsequent upgrades) has:
- 28.1m 1P
- 72.8m 2P

We know there is oil in Nash as the well they have drilled has oil with good flow rates. The question is what would the market be happy with & (more importantly) what would the market be VERY happy with.

On current Mkt Cap (470m) we have a value of:
- $16.73 per 1P
- $6.46 per 2P

If this Nash dome report (remember, it's only the 1st cut, Blue Ridge has been upgraded twice since the IPO as they have drilled more & more of the land) contains somewhere in the vicinity of what Blue Ridge originally was estimated to have (note this is VERY OPTIMISTIC & IMO WOULD BE AN UPSIDE SURPRISE - but we need to start the discussion somewhere) the (total) new reserves would be:
- 35.9m 1P (7.8m for Nash)
- 98.4m 2P (28.1m for Nash)

These upgraded reserves would mean we are now trading at a valuation of:
- $13.10 per 1P
- $4.78 per 2P

For those who subscribe to Motley Fool, he was suggesting that $7.50 per 2P is fair value for the stock with current production profile & current information. Hence he is currently advising people start locking in some profits at $1.30 ($7.50 x 72.8m = $546m Mkt Cap = c. 1.35 per share)

Using that figure as a benchmark, now that we have reserves of 98.4m 2P, we can say that fair value would be around....

$7.50 x 98.4m = $738m Mkt Cap = c. 1.84

All with Boiling Dome reserves to come in another 6 weeks...

This is all IMO & I am by no means an O&G expert. Commentary, discussion & anticipated reserves are welcome from all users!

Go MADers!!