There is a significant difference between 1P, 2P and 3P.
To put it in layman's terms, 1P means that there is a 90% chance that CVI has 24M barrels of recoverable oil.
A 50% chance (2P) that CVI has 48M barrels of recoverable oil...and a 10% chance (3P) that CVI has 120M barrels of oil.
You need to understand that these figures are expressed as RESERVES...not resources. There is a significant difference between the 2.
This is the major reason why CVI has increased to these levels...no other reason.
As an example, if a company has 1M barrels of oil (1P Reserves) the market cap (in theory) should be about $30M.
CVI has 24M barrels (1P Reserves) and on this assumption, the market cap should be around $700M. The current market cap (fully diluted is around $90M.
This valuation is very conservative because I have only applied 1P Reserves. Assuming I apply 2P Reserves...the the MC should be double that...ie, $1.4B.
I am sure any reputable analyst would also arrive at these valuations.
As T4P re-iterates, the more boxes CVI ticks, the closer CVI will get to these levels.
Finally, the market is not an exact science as we all know. Other factors also come into play such as technical analysis and market sentiment, as well as global factors. But in the end, the underlying fundamentals is the key criterion in basing your investment decision.
CVI Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
