Warning : The following contains rampant speculation and predictions, and some
rough mathematics.
Soooooooo, to try and figure out your question about how high is CSMA
reasonably expected to go ? Well, for starters, I would use a PE of about
15:1 - this gives a return on shares of about 7%, which equals or exceeds
bonds,most regular bank accounts and most real estate rental properties. Not
too inaccurate, with current PE's in the Dow averaging around 20.
I would assume that the significant amount of liquid assets that CSMA has
(read : ca$h) would not be used to pay out dividends, but will be sunk
back into oil exploration, upgrading the disposal well and expanding operations
in the other subsidaries. So, I won't count that.
CO&G, LPS and Adhatters financial info will be released on or about Dec 1st.
Multiply earnings per share there by 15 for starters. (+) news expected.
The Utah disposal well is expected to charge around $20, +/- a few
dollars. It requires minimal upgrading for class V classification, and
is currently profitable at a charge of around $0.70/barrel. So if 7500
barrels are disposed of daily at $20, then we're talking of about around
$30,000,000 a year into about 15,000,000 shares...i.e. $2 a share minimum
to add to the above.
Then there's the sale of the Uinta property for "an undisclosed amount of
shares and cash" from ERHC. This property sits on 52 million barrels of oil,
and must be worth in the hundreds of millions of dollars. Now figuring that
the company got less than 100% of the value, but got a reasonable amount,
that will add to earnings if ERHC does well, or if CSMA cashes the shares
in early. If payments occur over 8 months, then it can't be exactly chicken
feed, now can it ? Even 10% of the property's value is a goodly sized
chunk. Once again, Dec 1st should tell all.
The unprofitable aspects of CSMA are being shedded. Expectations are
of a "modest" yearly profit, but with strong 4th quarter earnings. CSMA cleaned
up its act mid-year, and has turned the corner towards success again. If we
are to assume that the 4th quarter is indicative of future trends with this
company, could we take 4th quarter's profit, add at least $2 per share to it,
factor in the ERHC deal, and multiply the whole damn thing by 15 ??? Perhaps
the 4th quarter will be unusual because of the Uinta sale, but will this be
regarded as a one time amount and not be factored into the earnings as such ?
Does this mean that CSMA is expecting a modest profit without a 1 time
addition, and that the 4th quarter really does see a turnaround from selling
off losers and concentrating on the winning aspects of its business ?
*** Warning : Really Speculative here ***
I get an answer of AT LEAST $30 a share, assuming that my above suppositions
are close to the mark. That's from 15:1 PE with at least $2/share earnings.
Please correct and/or enlighten me if I'm wrong, as I'm relatively new to
the Stockmarket and appreciate more experienced poeples' advice.
I'm not hyping.... just trying seriously to put a figure on the future
potential of this great little company. Your input, comments and flames are
most welcome. I'll read them tomorrow when I get into work (where my
computer is). Good night, and talk to you all in the morning.
Regards,
Durro |
