RoosterMan, Your one good eye is focused on the right points to watch.
They have indeed had a fast upward record of earnings growth in 94, 95 and 96.
With wells like Bowerbank 5B coming on line, they should do well in
97 if gas prices hold up vs last year. I heard a figure of 55 cents for
97 mentioned, after earning 34 in 96, 14 in 95 and 1 in 94. They are drilling
or completing several other wells at present.
When they drill, the're after 2d and 3d previously defined targets. When the
drill encounters these gas zones, they are recorded on electric logs, and
measured for depth (thickness). On the Bowerbank 5B, they apparently
encountered 5 or 6 zones (large undergound pools of gas) at different
depths, and the total of those gas filled "pay sands" totaled about
60 feet, and the last one on the bottom was 20 feet thick. It is this
pool of gas that they began production from, and that zone tested about
1.9 MCf per day on production. After that zone is depleted, there is
40 more feet of pay sand in 4-5 more zones to pump out and sell. :-)
They hooked up the 5B into production quickly because they knew they
had a winner as they began to encounter multiple zones during the drilling,
and they had previouly drilled several other producers in the Bowerbank
field, and there was a gas gathering system relatively close at hand..
Another point about Royale is that they paid off their debt in 96 and
have an unused line of credit available for any attractive situations
they encounter, like good properties, etc.
The stock has formed a solid base at 5, although it has dipped under
5 by a little during day trading on a couple of days in the last month.
I have heard forecasts for a stock price next year of 8 and 10 from
several folks, and 55 cents per share earnings could support that.
Wayne
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