Ed,
I spoke to Les today, and here is a summary with some of my own interpretation. As you already mentioned, this company now has an annualized cash flow after G&A expenses and royalties of around $350K. Also their earlier private placement financing cleaned up the balance sheet so that this cash flow is now available for growing the business rather than paying the debt. He indicated that he would like to build NUS up to the 1-2000 BOE per day production level and then maybe sell out to a larger company. They plan to grow the production from the current 100 BOE per day level to around 400-1500 BOE per day in the next 12-16 months or so. The nature of this business does not allow for precise predictions.
They can attain the high end of the production target if the Brazeau wells are a good success, otherwise it will probably be closer to the bottom end of that range. Though 400 BOE per day figure is not spectacular, it should still result in a reasonable appreciation in the stock price of around 50%. A rough estimate IMO is if they hit 1500 BOE per day target, that should result in a $1.50 share price. Also there are another couple of deals in the works, including that wildcat well in Southern Alberta you already mentioned. The second potential deal is a property in Saskatchewan somewhere. So I see a potential 1.5-5x gain in 16 months from the current 35 cents share price, with flat oil prices. Obviously if oil prices go up as some people are predicting, the gains can be much more.
My impression of Les is he is pretty sincere in his goals for steadily developing the company to the benefit of its shareholders. Besides, he personally owns 10% of the company. He has stuck with this company for more than 2 years, slowly digging this company out from under the mess that previous management got it into. For 2 years or so, no new shares have been issued. NUS is now finally at the stage where it is pretty much debt free and is cash flow positive and so can now pursue a growth strategy.
Ram |
