Unreasonable good financials projected for Stonehorse Energy, page-3

Table 2.

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This tables takes the earnings from table1 last column and uses the equation of

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SHE Fair value Market Capitalization = sector (P/E) ratio * SHE Earnings + Cash reserves.

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Currently the market has assigned no value to SHE current earnings or forward looking earnings.

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So SHE Effective P/E starts out at zero. But this will grow as the market sees evidence of SHE executing its future earnings strategy as seeing revenue grow. I have modeled this in column 1 as effective P/E of zero today linearly growing until it reaches slightly below the sector average of 13.6 at month 30 when they become self-sustaining.

As indicated above SHE could payout dividends of 100% of today’ current market cap and carry on reinvesting in 3month time with a new well sustaining its earnings year on year.

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On first dividends payout I would expect the effective P/E ratio to jump or triple to 36, then decay again until next year dividends.

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David has indicated his intention to open multiple wells in Alberta, He has built an experienced and keen team who have repeatedly iterated there are plenty of opportunities for SHE to grow production .

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And don’t forget that we have the trans-mountain pipeline opening up increasing transport capability a 1000% removing the bottle neck in piping it to Vancouver ready to shop to Asia, japan where prices are premium.as Bill said timing could not be better.

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In addition Alberta gas prices historically on average rise 30% over the winter months.

( I have done a spread sheet on this as well, looking at historically Alberta gas prices)

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So what is outlined in table 2 appears to be achievable and David answered in answer 2. ‘targetproduction volume well within reach in a reasonable timeframe’ and his subsequent answer” Yes, we are planning to achieve this in 2-3 years. “

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Columns

Column 1) is month,

Column 2) are Potential dividends for that month.

Column 3) is effective P/E ratio the market may assign to SHE, it factors in market belief in current earnings and future earnings and their growth.

Column 4) of table 2 is market capitalization value of SHE given an effective PE ratio , projected earnings and cash values.

Column5) is the associated SHARE price at the given market cap.

Column 6) is the increase in share price over current share price of 0.016

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Note in month 30 it is showing SHE paying out most of the earnings less cost to sustain earnings, we have made this around 10.95 million as there is no official dividend policy, considering current market cap is 10.95 million, then the dividends would be100% of its market cap. Of course it might be a fraction of this allowing SHEto carry on its exponential growth rate. Even a 40% of current market capdividend would probably triple market cap.

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In a previous answer David said that he expects at payout production will be 30% of initial production , This seems to be higher than the type curve of a nearby certus well indicates. So in our model we have been conservative by using the certus type well curve with production slowing down after payout.. Although David indicated pumps in the well shaft could be used.

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The first model is conservative and has a putout in line with David expectations,

Consequently increasing my confidence in the CEO projections as the models show it David expectations are realistic.

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IF the dividend of 10.95 million was paid out in month 30 and the P/E ratio is the industrial sector average 13.6 then the return on that dividend is only about a reasonable 5%....Nothing to get excited about.

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The last column listing % return in table 2 might seem unreasonable good and that is because it is unreasonable good, and that is in turn because the share price currently is unreasonable poor at the moment.

Caveat

I am a nonprofessional and an amateur hence theabove are my personal and nonprofessional views of Storehouse future fairvalue.

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These models ignore risk factors such as:

war, drilling failures, finding no gas or oil or rate of production is a fraction of what is expected.

David Deloub might reach his target earnings butnot pay any dividends as he indicated.

They might not reach the earnings outlined heresuch as decide to stop drilling or team members might leave.

Other companies might compete to drill in Alberta drivingup prices or removing opportunities.

Government could do a massive windfall tax.

Weather might affect drilling their

And market cap might not budge despite earnings ordividends.

SHE ha no official dividend policy.

My assumptions may be wrong, financial model may bewrong , arithmetic errors might lead to big errors.
Assumption was made of new wells being same as certus 1-33-34 well

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Share prices like people can behave irrationallyand not react as expected as reflected in share prices.

David might be wrong in his estimates or myinterpretation of them might be wrong.

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Treat what I have written as a financial fictiongrowth story of a depressed nano-cap based on inexperienced supposition, poor numericalmodelling built on top of unfounded naive assumptions designed to bring asmile.

Do your own research and use your own judgement andmaybe even share on hotcopper.

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ANYTHING CAN HAPPEN to SHE share price.