Red Emperor ResourcesAfter a recent capital raising of $12.2M...

Red Emperor Resources

After a recent capital raising of $12.2M AUD, Red Emperor are fully funded for a 3 well drilling campaign going into 2011.

Similar to Range Resources they have 20% of the Georgia Project and 20% of the Puntland Project but with only 150million shares in issue compared to Ranges' 1.6billion

The following are a few calculations that I've done up to show what a success in all three upcoming wells could be worth to the shareprice by the end of 2011.

Info:
Ticker: RMP.ASX
Shares in Issue: 149,616,114
Market Cap: $39.6M Aud or 24.8m Gbp
Current Shareprice: $0.265 Aud or 0.165p

First possible Georgia target:

-Vani 1 (V1) 171 million barrels OIP

Take say a conservative 30% Recovery rate: 51.3 million barrels
Georgia Government take: 65% - 35% (35% is 17.9 million barrels)
RMP's 20% = 3.59 million barrels
@ $30 per barrel = $107,730,000 = 66,624,095 GBP
Divided by number of shares in issue = 45p per share (currently 16.5p)

Similarly, by using the same figures for the second possible Georgia target:

-Kursebi 2 (K2): 160 million barrels OIP

Take say a conservative 30% Recovery rate: 48 million barrels
Georgia Government take: 65% - 35% (35% is 16.8 million barrels)
RMP's 20% = 3.36 million barrels
@ $30 per barrel = $100,800,000 = 62,320,527 GBP
Divided by number of shares in issue = 42p per share (currently 16.5p)

Similarly, by using the same method to calculate the first Puntland target:

-Puntland (First Drill): 1bn barrels OIP

Take say a conservative 30% Recovery rate: 300 million barrels
Puntland Government take: 50% - 50% (50% is 150 million barrels)
RMP's 20% = 30 million barrels
@ $10 per barrel = $300,000,000 = 185,548,754 GBP
Divided by number of shares in issue = 124p per share (currently 16.5p)

If RMP take part in the 2nd Puntland Drill that's due to be spudded by September 27th 2011 they might need to raise funds for this.

I'm assuming a Share Price of $0.50c.
In order to raise their required percentage of costs of $5m, they would need to issue an extra 10m shares.

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* Under the Jan 2011 amended PSAs, a minimum of one exploratory well must be spudded in the Dharoor Valley Exploration Area by July 27, 2011. A second exploratory well is required to be spudded in the Nugaal Valley Exploration Area or, at the option of Africa Oil (as operator), in the Dharoor Valley Exploration Area, by September 27, 2011.
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-Puntland (Second Drill): 800 mbbls OIP

Take say a conservative 30% Recovery rate: 240 million barrels
Puntland Government take: 50% - 50% (50% is 120 million barrels)
RMP's 20% = 24 million barrels
@ $10 per barrel = $240,000,000 = 147,660,503 GBP
Divided by number of shares in issue = 93p per share (currently 16.5p)

--->
Potential total worth if all four drills are successful could be up to $4.92 or 3.04 GBP per share. The current SP is $0.265 Aud or 16.5p

That would mean multiplying 18 times by the end of 2011!

It would be my own view that if RMP proved up some or all of the above oil reserves they would be bough out by a major oil company, perhaps from China.

Currently on the ASX only, RMP are aiming to be listed on the AIM market around the end of Q1-2011. This would be important because it will mean that the share will be dual listed allowing UK private investors to buy the shares through their ISA tax free accounts - which would give the company more attention from private investors. Also, as we can see from RRL / RRS - there should be far greater interest and volume once listed on the AIM.