Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Teton Petroleum (TTPT) -- Russian Oil -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (6)	3/30/2002 12:29:19 PM
From: Crossy	Read Replies (1) \| Respond to of 115

Dear Ed, thx alot for explaining all the issues that I raised in all detail (sorry if I took too much liberty at your precious time). Also thx for linking Teton's last year's report. Immediatley downloaded it.. In the meantime I called their IR and found that Teton's current reserve is just on 7 wells drilled out of 40 possible. Using 75% success rate of drills (probably higher) this means ultimate reserves coul go up 4fold in the particular oilfield alone. Thx for explaining fully the valuation process employed by O&G companies. I thought it would be that way but had no real clue. You closed all my "missing blanks" that I had in my mind on this matter. BTW - you cite the conservative PE firm that Teton uses in Russia. IS that the famous Gustavson company ?? thx again for pointing out Teton. I made quite substantial purchases and told all my friends about Teton. The IR firm feels that a move to the AMEX would make sense as soon as they qualify ($3 avg bid price if my memory serves me right). I watched HHLF in the last 18 months and see it more than triple. And HHLF was in Kasakhstan not in Russia so it is less stable. Also HHLF was more "expensive" wrt. valuation that TTPT.TO is now.. I have a related question regarding valuation of reserves which I will defer to the next post.. thx so much CROSSY

To: Ed Ajootian who wrote (6)	3/30/2002 12:40:06 PM
From: Crossy	Read Replies (1) \| Respond to of 115

re: Nontraditional approaches to O&E valuation you say "it's pretty lonely at the top" - and actually I wouldn't say you are kidding. In fact you have been quite actively researching firms that I found later on, only to learn you have been there many a time before. Plays like HHLF or BNO... I found those firms by applying the "inverse" to your calculation of TTPT's oil reserve costs. You calculated implied cost=Marketcap / Barrels Oil in Proven Reserves.. Months ago I was making up my mind how to better value oil stocks (instead of Cashflow or PriceSales or PriceEarnings). I used the formulae: RRatio=BCFEs (gas equivalents) divided by marketcap. I noticed that ratio is mostly around 1-1.5. Cheaper plays had ratios in excess of 2. BNO had 10. TTPT has 16 now. HHLF had 7 in the past, around 2.5 now. I leave out debt and purposely omit any pricing of the reserves becuase I feel that oil&gas prices are going up steadily. So I just get a Qty Gas Equivalent per $ Marketcap figure.. Of course highly leveraged stocks have the "untouchable" status which usually makes them extra cheap. Once they sell off reserves and deleverage (see: BNO) the price pops and the true value is starting to be realized.. MAybe ABP and PNO are next in this category.. Being not too famiilar with O&E I tried to learn from experts like you. Saw you are DDing Callon Pete and Fortune Pete. Especially Fortune doesn't have a good Reserve/Marketcap ratio (just around 1). Do you feel that their drilling program can improve reserves so much (sort of "pre-empting" future reserves ??) best rgrds CROSSY