Crossy,
Great to have you join me here -- its pretty lonely at the top! <g>
I believe you have made an excellent choice at picking up some of this stock at current prices. They are very close to getting some major financing and once that happens the stock will go absolutely idiotic. Also, they are about to go to Europe to hype the stock so that it can start trading on the Frankfurt exchange.
If you are thinking about buying some more I would strongly urge you to complete your buy program next week. The stock seems to have found a home here at the $.60 range so you need to ante up and start buying at current prices if you wanna own any more of this.
At $.60/share you are buying proven oil reserves at a little over $.40 a barrel. Granted, most of these reserves are not developed yet even though they are proven, but this is a stunningly low discount for this fact. As they drill out more of the field and as they get more financing, this discount will gradually (and sometimes not-so-gradually) come down and the stock price will correspondingly appreciate.
The company will be getting an analyst report very shortly which will answer all of your questions regarding the potential value of this company's oil field. For now, you may want to refer to last year's report, which is at teai.com
The report last year is off in two major respects. First, it does not have the latest proven reserve figures, which are now about double the amount of reserves used in last year's report. Second, it used a price for a barrel of oil in the ground that was way too high for Russia. I believe a reasonable figure for this is something on the order of $1.50 -- $2.
To answer your specific questions, all publicly held O&G companies have to get a valuation done by a petroleum engineer (PE) at the end of each year. The PE looks at all evidence obtained by the company during the year to determine what is the amount of proven reserves they have. The more conservative PE's such as the firm Teton uses, do little extrapolation of results from the immediate area around a particular well that is drilled. So if you have 5 properties, and you have only drilled 2 of them, then you only get to book proved reserves on the 2 you have drilled.
The 3 that you have not drilled may be described as "probable" or "possible" reserves. These categories are not recognized by the SEC but many companies see fit to disclose these reserves to their shareholders. As long as the company makes it clear that these are not proven reserves I believe its kosher to disclose these other potential reserves. I understand that Teton is intending to disclose such reserves in the near future.
Its not uncommon for "probable" and "possible" reserves to amount to as much as the proven reserves in a field, in the early stages of drilling it out. So Teton could potentially be sitting on a truly massive oil field here.
If in fact this turns out to be true, it would not entirely surprise me since Teton's oil field is only a few miles north of the largest oil field in Russia, the Samatlor. This field has in excess of a BILLION barrels of oil in it, between what has been produced so far plus what is still left. |
