valuation

Hi guys,

I found this old post from ronstieb. He knows his stuff, but we seem to have lost him & most of the other good oilers atm. I don't mean that to be an insult.

I don't think he would mind me re-posting it. It mentions a risked valuation for gdn of 50cps. Given gas pressures in the drill stem, it's probably fair enough that gdn is a good bit higher than that.
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Subject re: valuation
Stock Code GDN - GOLDEN STATE RESOURCES LIMITED
Posted 17/10/06 09:59
Posted by ronstieb
IP 202.47.xxx.xxx
Hotcopper Radio GDN on BoardRoom Radio
Post #1309948 - 597 reads
In Reply to msg #1309693

bigscot
heres my calculation of a Risked value for GDN prior to a result at Paradox-1

GDN would have 206.5mil shares fully diluted after options exercised in the event of a discovery
Proceeds from options would total $17mil
They are targeting 440bcf best case.
I would use an NPV of AUD3/mcf for Utah recoverable gas inground
After royalties and Eclipse backin, GDN end up with 65% of production revenue
The company uses a probability of success of 19% but for the 440bcf case I would use 10%

440bcf x $3mil/bcf x 65% x 10% = $86mil
+ $17mil from options = $103mil / 50cps

Stocks rarely reach their full risked value prior to a result, 50% of risked value being more common. Thats where GDN is atm.
Will need some further convincing gas or oil shows to push it higher given the downside risk.

A duster would see the stock trading at ~10c imo