Regarding calculation of the value of 36bcf of reserves and the $3.6 B dollar figure, I came across the following in an SI search for BCF
>>Dalton's 7.5% would net 150 BCF. Conservatively valued at $0.50/MCF, Dalton's net reserves would be worth $75,000,000 and would equate to $3.75/share of asset value.<<
Interesting to note that this company values their reserves at .50/mcf, whereas MIDL values theirs at $1.00/BCF, exactly twice the value. If we take the Dalton figure of .50, then the self-estimated reserves of 36BCF owned by Arcon are worth $18 million dollars. If we use the $1 estimate of Arcon, there is a value of 36 million dollars. Now $36MM ain't half bad, but its a hell of a long way from 3.6BB. Maybe its just a typo or someone doing bad math, but its an error of at least 3,564,000,000 or 3,582,000,000 depending on which MCF estimate one chooses. I wonder if management reads their releases? Certainly anyone with any experience in the field would recognize such a glaring error immediately. If my calculations are correct, the company should quickly print a correction.
If one figures 27.5MM shares, the asset value of the self-estimated reserves is .65/share at the .50/MCF figure or 1.30/share at the $1.00 figure, not bad for a stock selling at .68, and far more believable than the $130/share the company's figures suggested in its release. I can only hope they are better at estimating reserves than they are at calculating the value of those reserves. All in good humor. |
