When gas properties are sold or taken over, a price is usually paid based on 1P (or 2/3P) Reserves. They have indicated they are looking at a minimum of 80bcf, with unofficial reports of up to 200bcf quoted at the agm.
Recent sales have averaged about US$4/mcf 1P. If you take RRSs 25% of 80bcf, you get a US$80m valuation. After they have drilled more wells, this could easily go to 200bcf with a corresponding increase in valuation. And then we have Puntland etc
There is much upside to this share. Hopefully when they get production happening, it will finance the other operations and there'll be no need for more dilution.
RRS Price at posting:
5.3¢ Sentiment: Buy Disclosure: Held
