us eyes cooper, page-22

I'm not sure what's so hard to understand - I think it's fairly priced at present, but I think there are future catalysts for growth, and I want to be holding BEFORE those catalysts happen - not trying to buy in afterwards!

It's called a buy-and-hold approach to investing, very much out of fashion these days, particularly among the ramping crowd who want to convince every HC member SXY is worth $1.50 so that they can sell out and move onto something else.

You refer to several methods, but dont outline your calculations, no doubt in the hope we accept your back of the envelope calculations.

As I already said, I have posted my calculations before, and you are welcome to go back over my previous posts on SXY using the "search" function until you find them. There are a couple at least. Here is one where I put out my calculations and concluded SXY was undervalued at 59c, with fair value 80c:

Post #: 9403137

Feel free to accept or reject my back of envelope calculations - it's no skin off my nose, and I freely admit they are back of envelope. But keep in mind what the SP has done since I posted that. It's recovered back to a ceiling of 80c - so tell me who was right, me or the brokers???

So all up that is about 50c per share valuation for SXY's 'hard' assets, and everything else is blue sky including Hornet. That's generally a good place to stop, because anyone who thinks they can value Hornet accurately at this stage is kidding themselves. I just know that in unrisked terms, it's a monster.

You state that despite a constant stream of good news the sp hasnt moved. This flys in the face of your own argument. This constant stream of good news is adding value to the company (but not the SP). Every time we have drilling success and find miore eserves, the company is worth more - thats how it works.

Drilling success adds FUNDAMENTAL value, but that is NOT the same as market value. Market value is a perception that is based on many things but includes the perception of future success. In Senex's case, they have been having a lot of drilling success and it's obvious their business model for oil is working very well.

Do you think market players don't know that? Do you think that they are waiting for drilling success before they ascribe value to the company? Of course they're not! They know that of these 30 wells Senex are drilling, a good number of them will be successful and will add reserves. They factor that in when they ascribe the company a market value. That's how Senex has a market value that is in excess of its fundamental value. It's very common - OSH is a great example among the blue chips, with its massive forward PE waiting for its LNG project to start up. Nobody is waiting for the taps to turn on before ascribing it value.

Likewise when the shale 'boom' happened in Cooper Basin stocks. DLS, BPT and SXY all benefitted, among others. That's how SXY got up over $1 - the perception of shale. Those expectations have come off a bit as the realities of shale drilling in the middle of the Outback have set in.

You suggest the numerous broking houses have it wrong, but at the same time we should listen to your unsupported thoughts. I dont think so.

Well, now you have both my supported thoughts and evidence that my estimate was nearer to the mark than the brokers. Note also that the SP bounced off a price that is remarkably close to my fundamental valuation (at which SXY becomes undervalued). That is the support for SXY's SP - it won't drop much below 50c IMO because that is its fundamental valuation.

So here's my prediction for the NEXT six months (maybe 12) - we'll get more great oil announcements which will barely trouble the SP because they are already factored in, but there will be a big announcement on the gas side of things that will finally get us moving again, and hopefully get put us over 80c for good.

I continue to hold as I bedlieve it is undervaled and that there is plenty of blue sky over the next 12 months with an intensive drilling program, a potential JV and looming eastcoast gas shortages.

I agree with you there, and that's why I continue to hold as well. But the blue sky is in gas, not oil. The sort of Reserves volumes they are adding to the oil business aren't significant - this year they added about 4 MMbbls 2P net of production from memory. I am forecasting Reserves adds for this year of maybe 5-7 MMbbls (minus production). That's a pretty big call because it's a 50% increase, but I think they can do it. But even that is only worth maybe $75M to $140M - or about 7 to 13c per share. And as I said before, I personally believe much of that value is already factored in anyway.

If you want a value over $1, you have to look to gas IMO.