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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (45267)	11/2/2011 1:03:34 AM
From: Spekulatius	2 Recommendations Respond to of 78476

>>They already turned down $125M and when it becomes operational (1st phase) in Q1 2012 or Q2 2012, the market value in my estimate s/d be $400M. When they complete phase 2 (basically increasing capacity and adding more processing/ NG compression liquids) CEO Evans stated that the "plant" would be worth close to $1B.<< 1) in order to be worth 1B$, it need to generate 100M$/annually in EBITDA 2) How much is is going to cost to do all above. Typically, expansion projects like that go for 5x EBITDA multiples, which means they would have to invest 500M$ in capital (250M$ in Equity / 250M$ in debt). 3) There is a time lag between putting the assets into the ground and generating EBITDA. The ghist of my post is that you can't count the value of the assets without accounting for the cost to build them. Sure building something for 500M$ and then selling it for 1B$ is nice (if you can get it) but you have to include that the build out need so to be pre-financed which is not a minor feat given MHR high cost of capital.