Yeah, I agree as regards that $15.00 number.
I checked last night, and from what I can pull up from Google, I found people who do use $15.00 per barrel of oil in the ground. Both for proved and probable apparently.
However, previously I've also found people who use $20 per barrel. And that's what I have been using.
Anybody can value reserves any way they want and post the value they get and compare it to the stock's price or EV. My observation is that there's a lot of assumptions that are made or conservative numbering that's going on. So different people will get different results. In other words, Spekulatius or anyone else can post their numbers on an e&p and say the stock is or is not undervalued. That's only their opinion. And with oil in the ground, it depends heavily on assumptions used. I'll use my assumptions and make my calculations, and I may come up with a different conclusion.
For me, I am doing what I see other people doing - those pundits who write and apparently who imply they have some expertise. There's a variety of opinion out there. Most times I want to be conservative, and this is what I see some pundits doing, so I follow (sometimes) and use this:
1. Use enterprise value, not market capitalization
2. Use shares fully diluted, not outstanding. (And it makes a difference since there are so many options issued by the small e&p's.)
And there are other variables too, e.g. I use proved and probable, whereas the most conservative approach would be to use proved only. (And the least would be to use proved, probable and possible) |
