when will it move?, page-10

Boy, I love a challenge, esp on the fundamental front. One reminisces on the RSPGA notes vs RSG shares debate a while back, boy that was a cracker.

Oseil is estimated to produce 18,000 barrels a day when it is fully in production later in 2003, early 2004. KRZ's share per annum of this is 160,000 barrels.

Bula produced 96,000 barrels of oil in the prior half year, and are forecasting a slight increase. Let's say 200,000 barrels a year. That's 360,000 in total.

The drilling rig is said to be quite profitable, they seem to be busy drilling for the Oseil project, so they are invoicing that out as well. They have announced this division to be profitable, billing US$1.2M in Sept qtr. For this argument I am assuming a net profit of A$1M per year to the company. Admin costs for the year, last year was A$708K, let's say $1M for this equation, so this offsets the rig profits.

Net margin per barrel of oil produced, I am not exactly sure exactly where KRZ fits in, so let's try a range.

At A$5 net to the company, that's 360K x $5 plus = $1.8M profit
At A$7.50 net, that's 360K x 7.5 = $2.7M profit.
At A$10, that's $3.6M profit.
At A$12.50, that's $4.5M profit.
At A$15, that's $6M profit.

The market cap of KRZ is $8.7M at 0.7 cents.

At A$5 net oil margin, PE is 4.8
At A$7.50, PE is 3.2
AT A$10, PE is 2.4
At A$12.50, PE is 1.9
At A$15, PE is 1.5.

Bohemian, if you want to lock fundamental horns with me, may I suggest you are messing with the wrong guy. Nobody 'out-fundamentals' OMR (they only improve on his calcs)

If those fundamentals don't attract people to this stock, well so be it. There is a reasonable risk factor to factor in and that may keep many away, but if (and it's a IF) KRZ can deliver at say the $7.50 or $10 net margin mark, well that's very attractive indeed.

Other KRZ'ers, please step forward with some constructive input on my above calculations. Feel free to venture where you think KRZ's A$ profit per barrel is. This debate is really warming up, I am in my element.

OMR