A lot of talk of how Texas is the stop loss on this share, so I thought I'd try and work out exactly what value we can place on this.
Going on the premise that shares on emerging companies will sell at 10x earnings per share, I've worked out figures for the two Texas projects (North Chapman Ranch and Red River County) and also tagged on the Trinidad project for future info too.
In addition, I've added a line under each showing the notional SP underpin per 1000bopd/boepd which we can use for future flow rates as they appear.
Units/assumptions:
1.5bn shares
Revenue at $75/bbl & boe, $4.3/ccf
NCR Profits at $35/bbl & boe, $1.5/ccf (estimated)
RRC Profits at $68/bbl (confirmed at $75/barrel rate of sale)
TT Profits at $30/bbl (based on PL email to Karmeng1)
6000 cubic feet gas = 1 BOE
Obviously, I'm guessing new flow rates for both Smith and RB1, but this is for future comparison purposes.
North Chapman Ranch, Texas:
Smith#1
Oil: 1000bopd (250bopd net)
Gas: 10mmcf/d (2.5mmcf/d net)
Revenue:
Oil: $75,000/day, $27.375m/yr ($18750/day, $6.84m/yr net)
Gas: $43,000/day, $15.695m/yr ($10750/day, $3.92m/yr net)
Profit:
Oil: $35,000/day, $12.775m/yr ($8750/day, $3.19m/yr net)
Gas: $15,000/day, $5.475m/yr ($3750/day, $1.37m/yr net)
RB#1: (Notional figures based on notional 15% additional pay thickness and zone)
Oil: 1150bopd (230bopd net)
Gas: 11.5mmcf/d (2.3mmcf/d net)
Revenue:
Oil: $86,250/day, $31.48m/yr ($17250/day, $6.29m/yr net)
Gas: $49,450/day, $18.05m/yr ($9890/day, $3.61m/yr net)
Profit:
Oil: $40,250/day, $14.69m/yr ($8050/day, $2.94m/yr net)
Gas: $17,250/day, $6.29m/yr ($3450/day, $1.26m/yr net)
Total net profit across NCR: $8,760,000 per annum
EPS : $0.00584 (0.39p)
At 10x earnings, this underpins SP at 3.9p, plus average 1.95p per future successful wells
Potential for 8 wells, so potential EPS of 19.5p
For reference: Underpins the SP at 0.68p per 1000 boepd gross production (based on notional $35 profit/bbl) at NCR alone.
Red River County, Texas:
CV#2: [Notional] 500bopd (67.8bopd net)
Revenue: $37500/day $13,687,500/yr ($5085/day, $1,856,025/yr net)
Profit: $34000/day $12,410,000/yr ($4610/day, $1,682,796/yr net)
Total net profit: $1,682,796 per annum
EPS : $0.001122 (0.0748p)
At 10x earnings, this underpins SP at 0.75p, plus same per future successful wells
Potential for 22 wells, so potential EPS of 16.456p
For reference: Underpins the SP at 1.5p per 1000 bopd gross production, based on known F&D costs at $7.135/bbl at RRC alone.
Trinidad:
Initial 700bopd (70bopd net):
Revenue: $52,500/day $19,162,500/yr ($5250/day net, $1,916,250/yr net)
Profit: $21,000/day $7,665,000/yr ($2100/day, $766,500/yr net)
Total net profit: $766,500 per annum
EPS : $0.000511 (0.034p)
At 10x earnings, this underpins SP at 0.34p
Ramped up to 3500bopd (350bopd net)
Revenue: $262,500/day $95,812,500/yr ($26,250/day net, $9,581,250/yr net)
Profit: $105,000/day $38,325,000/yr ($10,500/day, $3,832,500/yr net)
Total net profit: $3,832,500 per annum
EPS : $0.00255 (0.177p)
At 10x earnings, this underpins SP at 1.77p
Eventual 10000bopd (1000bopd net)
Revenue: $750000/day $273,750,000/yr ($75000/day net, $27,375,000/yr net)
Profit: $300000/day $109,500,000/yr ($30000/day, $10,950,000/yr net)
Total net profit: $10,950,000 per annum
EPS : $0.0073 (0.486p)
At 10x earnings, this underpins SP at 4.86p
For reference: Underpins the SP at 0.486p per 1000bopd gross production, based on PL email confirmation of $30-35 profit/bbl at Trinidad alone.
Total future 'unrisked' potential is then 40p+ based on successful development of current work targets.
Currently, I would estimate the 'Stop Loss' figure to be around 4.9p - not bad at all for 1.5bn shares with only around $7-8m invested.
And all this without even touching Georgia and Puntland.
Again, all in my opinion, for my own research purposes, and posted for your information.
All the best, and keep DYOR.
DD
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