I'll punch up my position in Lucas Energy now.
From the company, 11/29:
"The net present value at a 10% discount rate ("PV10") of the potential reserves estimated for Lucas by Forrest A. Garb & Associates, Inc. (Garb) as of April 1, 2010 was $51.9 million. Lucas performed an internal evaluation, as of September 30, 2010, and calculated an $83.6 million PV10 valuation for Lucas potential reserves. Garb's report as of April 1, 2010 estimated 2.7 million barrels of oil equivalent (BOE) of potential reserves, whereas Lucas' internal report, as of September 30, 2010, had an estimated 4.3 million BOE of potential reserves.
William A. Sawyer, President and CEO of Lucas Energy, said, "Lucas sees much greater potential reserves from the oil window of the Eagle Ford formation than previously recognized by industry reserve engineers. Our research and internal calculations of potential reserves and PV10 values are much higher than in April, which results in a revised net asset value for Lucas of approximately $6 per share currently."
globenewswire.com
As press release alludes, nav is or can be shaky. Some stuff may add to nav (price of oil, unannounced/unknown reserve additions); some stuff detracts (nav number seems to be pre-tax, includes gas component). I assume with LEI being in the hot shale of Eagle Ford, and with company's apparently conservative business model, that maybe the $6 nav vs. current stock price of $2.32 allows for a decent margin of safety. Of course, with the oil business and its characters, and with oil's volatility, does one have any certainty? |
