shareholder value

One measurement that is not sensitive to market price and is an internal reflection of how a company's management grows shareholder value is to calculate how many BOE you produce per share.

Now in GGP's case the graph is per million shares. Graph is at end of post.

What this highlights is whether the company is creating shareholder value - i.e growing the BOE it produces for the capital invested in the company. It is particularly useful for companies that issue a lot of equity (if our primary method was debt finance you would likely use $EV).

So in other words, its OK to issue more shares as long as your corresponding BOE ratio is not falling - it should be getting higher as more capital is invested and we want a positive return on capital.

Up to Q3/12 data is sourced from the Qtrlys. Q4/12 I've simply taken BOE from Production reports and then added an estimate for the last 2 weeks. Also converted the remaining S2 notes

For Q1 next year add in the 1:4 rights for share issuance and then, estimate the declines for Dugas and existing PB, add into hopefully additional from #1, #2, #5 in Mar, add a little for Bowtie, zip for EFS and it comes to 11,500BOE.

If you take a TTM (Trailng Twelve Months) average for each of the last 4 Qtrs ranges between 5.5 and 6.5.

TTM on BOE/D produced is just around the 160 BOE/D - so our MC using the $100K per flowing BOE/D is about $16M - adjust up or down depending on your own belief of ability of GGP to grow this number.

To get to a $40M MC (or 1.1cps) going to need 400 BOE/D avg.

Here's the graph to highlight shareholder value (destruction) - shows the devastig effect of continued equity issuance (rights, placements and notes) without growth in the business of the company.