Something a little more interesting to discuss than a phone...

Something a little more interesting to discuss than a phone call.... Be interested in whether assumptions modelled are realistic - I am being conservative in my opinion. Does one need to discount for "Sovereign Risk"?

I've tried to rationalize the numbers into a purely PE based valuation (using 8 as opposed to higher PE which would be reasonable due to rapid growth).

Used fully diluted issued shares - expecting all options to be exercised - adds cash but that doesn't factor into the model (expect HOG to invest it into growing the company)

Starting it off for Q1-2012 onwards, with obviously SW-201 in full production and SW-202 coming on beginning Q3.

Made bullish assumption in Chernetska.

Used the numbers stated for price of Gas and Condensate by company and added 7.5% annual increase going forward.

Used modest decline of 2% quarter over quarter 1st 5 years and then 4% with condensate decline of 5% from start

Using profit margin at lower end of company guidance.


Based on all of that, Jan 1, 2012 based on future 12 months of earnings per share of 9.1cps implies a SP of 73cps

Of course this is "point in time" and subject to change and not advice and is likely wrong.