shrewd crude report valuation, page-29

92ross, $175M is a valuation if they actually find a spectacular amount of gas and declare a confirmed resource. What is the probability of that outcome? What is the probability of a lesser outcome? What is the probability of a dry well? Assign your own percentages to the various outcomes to get the current fair value.

If - purely for conversation - we wanted to say 25% chance of 3 Tcf confirmed, 25% chance of 1.5 Tcf confirmed, and 50% chance of a non-economic well, your risk adjusted valuation might be:

25%*175M + 25%*87.5M + 50%*$10M (something nominal for the failure case) = $70.6M

Market cap is already over that value. Given non zero probability of failure case, the stock looks close to fair value right now, given what we know so far. I cannot deny that tens of millions of shares are being purchased by institutions. It is impressive.