£1 a share - the likelyhood

I've pulled this from my post on iii:

A few people have noted £1 a share price targets and higher.

Just to put this into perspective, RRL at a suggested full dilution of 1.4bn shares at £1 a share would (obviously) give us market cap of £1.4bn.

This would take us into territory currently occupied by the likes of Heritage (£1.2bn cap), Dana (£1.1bn cap) and Premier (£1.4bn cap) so I've taken the liberty of comparing the 4 - analysis as part of my own research.
Rightly or wrongly, it's additional information, but it's always good to have additional information to help your target price setting.

Premier Oil (market cap £1.4bn):
Operates in UK (on and offshore), South East Asia and Pakistan
450mmbbls reserves (inc contingent resources)
45,000boepd production av. for 2009
Established long term producer, trading on FTSE250

Dana Petroleum (market cap £1.1bn):
Operates in North Sea and on/offshore Africa
357mmbbls reserves (inc contingent resources)
38,600boepd production av. for 2009
Established producer, trading on FTSE250

Heritage Oil (market cap £1.2bn):
This is IMO the most similar to RRL's potential, having drilled and found oil in Uganda and since agreed sale terms to Tullow (albeit currently in abeyance) for $1.5bn for 270mmbbls net reserves (470mmbbls inc contingent resources). We should note they drilled 29 wells over a period of 13 years to get to this point.
They also have further interests in Russia (583bopd, $298m NPV), a major interest in Kurdistan (760mmbbls net reserves) due to commence production Q4 2010, together with prospects in Malta, Pakistan, Mali, Tanzania, and Congo but none of these other prospects have been drilled as yet.

If we compare their Russian production to our Texas, and for the sake of argument consider them to be of equal value, then across their Uganda and Kurd interests they have 1030mmbbls reserves amounting to the largest proportion of their net asset value.

So, theoretically, for us to reach £1 a share (£1.4bn market cap) we would look for Puntland and Georgia combined to net us an approximate total of 1300mmbbls recoverable net to RRL, which is a push but not beyond reasonable expectation.

However, RRL operate across two exchanges and this will affect the SP ability to accurately reflect sentiment (see this weeks prices 4.8p in AUS compared to 5p in UK). A third listing in the US as previously rumoured may help stabilise this.

Also, it should be noted that HOIL's market cap was up as high as £1.75bn at the start of the year based on the same information, albeit this was after they announced the sale of the Uganda fields. And take into account their other prospects which would increase market optimism, but also our forthcoming acquisition which should do similar for us.

A long post, but hopefully of some value to some of you (if you have mde it this far...).
It will certainly help me keep focus on what the major factors will be in the coming months (and perhaps years).

I had initially ruled out the £1/share possibility as pure fantasy, but once again I may need to re-evaluate my long term targets!

Olical, how much for a V8 Vantage......?

All the best, DD.

By DiamondDon

I missed it on iii, but a good read.

Also good to find this forum, thanks to Mr Dross on iii for the indirect pointer.

Great to see some familiar and sensible posters in the members list.

Nice post DiamondDon,

I think we have a fair way to go yet, if I have learnt anything from iii bb's, is that there is a lot of hype and speculation. This type of board should attract serious investors, who will not be posting drivel.

I will be in it for the long haul, let's hope we see the 1 pound+ , but that could be a year or so away.

GLA

"So, theoretically, for us to reach £1 a share (£1.4bn market cap) we would look for Puntland and Georgia combined to net us an approximate total of 1300mmbbls recoverable net to RRL, which is a push but not beyond reasonable expectation."

DD- is Puntland and Georgia capable of finding these sort of reserves? the only way i can see us being valued at £1.4bn would be in a takeover situation??

ADMIN wrote:

"So, theoretically, for us to reach £1 a share (£1.4bn market cap) we would look for Puntland and Georgia combined to net us an approximate total of 1300mmbbls recoverable net to RRL, which is a push but not beyond reasonable expectation."

DD- is Puntland and Georgia capable of finding these sort of reserves? the only way i can see us being valued at £1.4bn would be in a takeover situation??

but Mr R .. what if range do produce in georgia .. the subframe is there already , and if we take it to market .. its worth a lot more than the $5 in the ground p1 , more like $20 p1 to range as strait own 50% im still a novice at this but im assuming we have to pay a % to the owners of pipelines and other equipment .
so if georgia is say 350mmbbls thats our 1.5 billion or £1 per share now shoot me down and show me for the dummy i am