Now we need to see what the company will do with all this cash. I never like to value a company based on its cash holding. It would be possible (highly unlikely) that all cash could be spent on dry wells and leave shareholders with nothing. Thats just one extreme, but a reason for not using cash to value mc. Remember in the peak of the GFC when we had companies with $8m cash worth $6m. Its was crazy, but true.
Back to SSN! I reckon she's a winner, for sure. We can value her on assets and look at what the rest of her land holding is worth, plus the drilling and sales to come. My calcs are for a minimum $200m mc company (10+c) in the short term. Anything under 10c is undervalued. Anything between 10-12c is value. After 15c they need to keep up the good drilling and results to maintain the sp rise.
I would love to see the companies plan for all this money. Its a bloody lot of wells, thats for sure! I am watching for small cap aquisitions and more land. I reckon there would be a temptation by the company to try and find the 'next new thing' and take a punt. It worked here!
SSN Price at posting:
7.4¢ Sentiment: LT Buy Disclosure: Held
