Scott,
I'll try to answer your questions and will make comment. But, you must
understand that it's related to this report only. I know nothing of this
company and their activities.
This is a small company with quite a few shares outstanding. I usually
attempt to compare production and reserves "on a per share basis"
to that of peer companies with approximately same market capitalization.
Suggest you take a look at it from this angle also.
What we want to concentrate on in relation to reserves is proven &
probable risked at 50%. Base line prices for gas & oil are o-k. Forget
what current prices are. In this case, we're looking at an increase of
107% in terms of barrels of equivilant from last year to this year.
Considering their increase in production over this same period, this
is good. The reported reserve life of reserves is excellent.
The news is factored into the share price, but it occurred from the
first of the year through the end of May. Drilling success increased
reserves, you just didn't see the official numbers until now. Shares
increased 5 fold over that period. Shares definitely have a public
following based upon the volume I looked at for the past three
months. I don't know if there is any institutional following of the stock.
Volume wouldn't indicate such.
Based upon 33mil shares outstanding (Stockwatch #) reserves are
valued over $2.00/share with 15% discounted.
This is the focus on the report. What wasn't mentioned was their
position in relation to undeveloped acreage. To contine their growth
in total reserves, they must accumilate more than the land consisting
of current reserves. Their workload for next 12 months is forseen,
but they must be looking beyond that at this point in time.
Also, I would like to know what they budgeted for 1996 and compare
it to the $6.7 planned for 1997. Also, you should know how the 1997
amount is broken down; developement drilling, exploratory drilling,
land axquisition and etc.. Last, have the company identify net asset
value for year ending 1996. More than likely, shares are probably
selling at a discount to net asset value.
Exit production of 1800 bbl's/d is expected for calendar year 1996.
If they are able to forecast this, then they are able of provide a cash
flow estimate for the coming 12 month period. Get this number, for
it will help evaluate potential share increase in value.
Company is on a nice little roll. However you should get additional
information, as I pointed out, in order to satisfy yourself that they can
continue at a good growth rate. |
