allanchr, if I have got my numbers right I think cash flow from...

allanchr, if I have got my numbers right I think cash flow from 1m bbls recoverable of heavy oil is more like US$25m (the spot price is quite a lot lower than crude, and extraction costs higher) plus Salinas has to give away a share of the profit, so call it US$20m. Still, not to be sniffed at. Also, the reserves of the main NSA field are likely to be 5m+, without any profit give-away. The reserve number will rise over time as the development programme proves up possibles and probables.

Strong internal cash flow in early stage E&P cos gives a strong boost to confidence for investors as it a) means that the prospects are real b) proves that the company has the technical ability to extract and produce (often taken as a given, but in reality technical challenges scupper many projects) c) new prospects can be explored with the confidence of strong internal financing. Investors know that the company won't keep returning to the market for extra dollops of cash (as is the case with so many smaller E&Ps).

Also this new field demonstrates that Salinas is ambitious in sensible expansion (rather than the usual scatter of projects all over the place you often see in other cos). It all gives the impression a company firmly on course to become a proper mid-cap player. For these reasons I think that Salinas will trade at a good premium to its NPV.

It is interesting your comment on the SP. The stock is clearly undervalued. I get the impression that the management haven't really been getting out there and marketing it yet. The story is not on a lot of radar screens among institutional investors. I think when they do start to do the rounds, that is when you will see a re-rating in the stock. I imagine this will be quite soon.