Hey Kakoii I'll throw out some calcs, but I'm warning you they will be basic.
Assumptions: 2011 cash flow projections being used. Using current oil prices at: $88 Production cost (including capital costs): $30 Profit Margin: $58
Barrels of Oil EQUIVALENT will be used to simplify the matter.
*** $30 production costs were mentioned in the AUT thread by two extremely knowledgeable posters ***
From the AGM presentation:
Quarter ending March: we'll have 18 wells producing in the quarter ending in march (currently 9)
Quarter ending in June: the company might release a new reserves report (which will include the Magueyitos acreage for the first time), no plans for any wells yet.
Quarter ending in September: we will have 22 wells producing by September.
Quarter ending in December: Possibly another reserves report, no plans for any wells yet.
So by my estimations, we'll have an AVERAGE of 19 producing wells throughout the year (at an average of 6.25% WI) (as at the start of the year we won't have 18 wells until march, same goes for the september quarter).
Currently EKA has 9 wells @ approxiamtely 680 boepd (taking an average of the 6:1 and 12:1 flow-rates). Let's approximate a 2011 yearly average of 1000 boepd after declines.
1000 boepd * $58/barrel profit * 365 days = $21.7 million annually before royalties.
$23 million* 0.6 = $12.7 million after royalties.
Let's include a risk factor of 15%. This relates to $10.8 million after royalties.
Using a PE of 10: MCap of $108 million...........207 million shares on issue Share price of $0.52
Using a PE of 13: MCap of $140.4 million Share price of $0.68
Using a PE of 16: MCap of $198.72 million Share price of $0.83
Current Evaluation using the conservative 12:1 ratio
590 boepd * 365 * $58 * 0.6 = $7.5million after royalties. Using a PE of 10, this gives a MCap of $75 million, and a current SP of $0.362 cents , without factoring anything in.
The above calculations are not factoring in anything about Magueyitos, which adds 50% to Eureka's net acreage, and I'd imagine, could result in a similar increase to reserves.
Personally I'd expect an announcement on EKA's intentions with Magueyitos or an announcement revealing further land acquisition, either of which would bolster EKA's SP even more. There is alot of upside in EKA imo. I'm targeting a share price of between 80 and 90 cents by the years end.
If you disagree with any of the figures above, please comment back :)
Cheers, Sharejon.
EKA Price at posting:
33.0¢ Sentiment: LT Buy Disclosure: Held
