When I started throwing loose numbers around for WCL i was basically just saying I could see 50c p.s being justified when the market accepts they have potential to sell gas at $6gj instead of what they are getting now. As you say when gas prices increase to $8 gj it is a rosy future we're looking at. As for comparisons to SXY, BPT or ICN on a p.e basis, I don't know if any of them can offer a good ruler for predicting how the market will put a value on WCL if it sticks to its knitting and just focuses on pushing production up and into a lucrative GSA- and that now seems to be the only plan on the table. For example lets say WCL did manage to keep a lid on costs and made about $20 million in earnings in 2016, I think that would be 4.5c per share and there is no way the stock would stay down at 23c if that were the case. You can even half that $20 million if you want to talk about royalties or whatever else and it still looks like the sp should be alot higher. Another interesting metric, (albeit misleading in $$ terms) SXY which is currently on a market cap of $800 million makes the equivalent of 7,033,824 gj p.a converting bbl to gj.. WCL at 15tj/d would be making 5, 475, 000 gj p.a. Clearly gas is not nearly as profitable as oil even at $8 gj but then you also don't tend to sink so much money into drilling your wells and need to forever locate another oil deposit- hence why these smaller oilers are on the p.e's they are.
If WCL didn't have the infrastructure already in place I wouldn't argue any of this, but it is all there and if they keep it simple from here and manage to get the production up they are sitting on a very clean set of books and that is why I can see the market ascribing a 15 p.e multiple.
Other comparisons to companies like BUL and ICN suggest WCL should be worth alot more, or BUL and ICN should be worth a lot less.
WCL Price at posting:
23.0¢ Sentiment: Buy Disclosure: Held
