strange stock, page-7

Chalks,

The following is very rough and just a guide

The facts are,

Gas is selling at $7.81 and BUR gets about 6% more than that

Oil trades at $99.64 a bbl

Current flow rates reported on the 3 wells are 0.75mmcfd & 25 bbl day/ 3.8mmcfd / 10.8 mmcfd

BUR's net % of what it keeps from these wells is 31.13% / 13.25% / 29.25%

This means the current revenue for BUR is $12mil P.A using todays facts and figures,

To note, Flow rates will drop, but more wells will come on tap.

And yes BUR has $5mil+ in the bank.

Stocks are usually valued by a PE ratio, which is price over earnings, In total there are 174,719,463 shares & options, so you could speculate a EPS (Earnings Per Share) of 8.2c each (which is $12mil / 174 million shares)

But you got to remember, these wells do slow down but more wells will come on.

Stocks like BHP trade at a PE ratio of around 16 which means the stock price is 16x the EPS, some oilers are higher. its all over the place but if we assume a PE ratio of 16 thats 16x 8.2c which is a stock price of $1.31

But this doesnt count Tax's and directors fee's and drilling costs. etc - just to give you an idea.

Because of the early stages of this co your best use a PS or price over sales ratio.

But with a PE if you assume half the revenue is lost in Tax's and fee's you could speculate this stock is worth about 60c this year, but you also want to factor in that there is another 22 wells left to drill and what will it be worth in the future? which can make the price tag higher as people are willing to pay more for this reason.

Because nothing is clear and the future is not clear this is a speculative stock and the price is speculative to what you belive and what you think it will be earning in the future and how much you want to risk that the next 22 wells could turn out duds.

This is also why the price can double and halve with stocks like this inside weeks, once it is a big producer and earnings become more constant a more stable price will come.

In my opinion if at the end of these 25 well's if BUR can make $40mil P.A and have new projects lined up to continue to grow its income then this stock could be worth $3 - $4 which i think is very posible in 3 y ears, if its only half this good then I am still happy with $1.50 from this current price.

This is why i belive the stock is seriously under valued and why i have brought 600,000 shares and options.

No risk, no reward..