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 : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (159839)	11/20/2011 11:36:11 AM
From: Ed Ajootian	Read Replies (1) \| Respond to of 206113

NiMin Energy (NNN.TO) -- the continued slide in the stock price last week caused me to completely re-examine my thinking on this stock with the thought that maybe I was missing something. After doing so I can say that I had probably been overvaluing the stock pretty significantly but I'm also very certain that the stock is very undervalued here at $.60. On 12/18/09 when WTI was trading around $77/bbl., Legacy Reserves announced an acquisition of Wyoming oil properties from Saint Mary, some of which were located in the Bighorn Basin, for $88K per flowing barrel. These reserves were not as valuable as NiMin's for 3 reasons: 1) Lower oil prices than presently 2) Only 93% oil vs. NiMin's reserves being 100% oil 3) Minimal amounts of PUDs (90% PDP) vs. NiMin's substantial amount of PUDs Thus it would be reasonable to conclude that NiMin should be able to garner at least $88K per flowing barrel if they ever were to see fit to put some or all of these WY properties up for sale, and they were able to entice Legacy Reseves to buy them. If we value the entire WY production at $88K per flowing barrel, assuming they can keep production constant at last quarter's 751 bopd level, that would say WY is worth $66M, meaning, with a current company EV of $77M, that the market is ascribing a value of only $11M to the value of NiMin's Pleito Creek reserves plus their CMD patents. I firmly believe that NiMin should be able to keep their WY production up at the 750 bopd level for at least the next 6-9 months, without drilling another well, merely by completing the last 2 wells from the last drilling program, getting the waterflood going at Ferguson Ranch going next month as planned, and doing a few more polymer jobs. The CA reserves, together with the CMD patents, are worth substantially more than $11M. All I can say is I hope NiMin is working on implementing a poison pill. If memory serves, management owns less than 10% of the company, so there is no natural block if someone were to make a run at this thing. I believe one of the reasons the stock is getting hit so hard is tax loss selling. Most energy stocks have had pretty good year so any stock that has gone down as much as NiMin's has is likely to get sold in order to shelter gains taken on other energy stocks. The GHS update on NiMin that came out 11/14 can be downloaded from finance.groups.yahoo.com . They lowered their PT to $2.25 based on a discounted NAV analysis (which considers that the CMD process is worthless, an overly conservative assumption IMO).