Pod #2 has a name - Algar Project. New valuation outlook.
Well, this should be perceived as a positive. Ya think? While it may take Bill a while to read through all the frickin information being so openly laid out for all to see, he will no doubt hinge his entire negative commentary on the fact that the reserve estimates aren't in yet as GLJ won't finish crunching numbers and report writing until sometime in the second quarter.
This has enough info in it to get an updated analyst's report issued (I would think before May), with a new target price. While we may have to wait until after the new reserve report gets issued to get this coverage, I would think some sprott or raymond J or other would want to give the new Heads Up before the blast off occurs. On a TA note, I see 3.95 breaking a very long and overdone downtrend, and the price has coiled up like a rattlesnake outside the Montana refinery. I've been told by better TA guys that 4.05 needs to hold to confirm same. But I'd see $5 being within range soon after that break if the overall market tanking doesn't tank investor sentiment once that happens. The 6-12 month target I'd give (I'm a biased shareholder) is $7.50, a little lower than the $8 I've mentioned before due to some expected dilution that'll happen (I suspect) enroute to financing Pod 2 - Algar:
>>The development of the high quality oil sands reservoir at
Great Divide's Pod One project is well advanced. Start up is expected to commence in the summer of 2007. Meanwhile, other pods have been identified for future growth. Connacher also plans to submit an application to regulators (including due consultation with all stakeholders) to proceed with an
additional 10,000 bbl/d project (the "Algar Project") at its Pod Two located east of Pod One at Great Divide.
The extra little bit of news I found pleasantly surprising (other than the cashflow numbers), was that CLL has a 10% carried interest in the two PDP blocks in PERU, convertable to a 2% gross overriding royalty. So if PDP hits in PERU like they already have in Argentina that could be worth having an extra 1,2 or 3 million PDP shares.
Valuation: So $93M barrels reserves @1.25/brl slightly higher value for upgrading to 1P reserves = 116M, 3000/boed valued at $50,000 (could easily be $60,000) = $150M, 13.5M shares PDP @$19 = $260M, refinery (had $29M margin in 2006, could be $40M in 2007 so $15,000/bd (seems cheap now) *9900 brl capacity = $150M, 10% of Peru say (haha) $4M, that's a total of $680M. Current market cap = $3.80 x 200M shares = $760. So Great Divide is now being priced at $80M. So what that they've spent more than that constructing it already?
On the old GLJ repoort, they had recoverable barrels at (Pods 1,2,3 and 4) 311M barrels. That's about $0.25/barrel. But the announcement that they do indeed have a 10,000bpd Pod2 means they added greatly to that old reserve estimate - another 60M barrels in Pod 2 if it ends up being the size of Pod1, Pod 1 may also end up 20-50% larger (they only drilled off enough last time to legitimize the project - not to fully delineate the resource) so I'd expect (and others following this closely) recoverable barrels to go to 400-480M. More is also quite plausible. The thing with infill drilling and increased seismic is that once the first real good look has been guestimated, (first report) the second will not have to be based on the same linear information, the extrapolation curve becomes slightly parabolic, so that the resource could double in size on only half as many new drill holes for example. I won't show my hand here, but I'd hazard to be optimistic. At 400M barrels current value is .20/barrel, at 480M its .16/barrel. Once in production and showing potential to expand, it'll get valued for what it is. Other producers get $3.00+ values on their reserves, so if CLL moves up to half that - from .18 to $1.80 then Great divide has the potential to double CLL's market cap.
I do think they've already started their long ascent, and that once that downtrendline is broken, the price will start picking up steam just as their project will. They've got a little catching up to do on PBG, but soon its 'full steam ahead' for CLL too. All yee naysayers be finally and at long last damned forevermore.
Haitokin |
