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

To: RevoltNapper6 who wrote (169523)	6/15/2012 9:11:02 AM
From: Ed Ajootian	Respond to of 206184

Revolt, RIdgeline Energy Services (RLE.V) -- a good start to understanding the "per-facility economics" of their water treatment business is at slide 14 of their latest presentation. There, for a 4-train system working at full capacity they demonstrate that the IRR would be 72%/yr. Other than a few choice locations, its of course unlikely that RLE's facilities would run at max capacity for a full year, but its helpful to see what the potential is in any event. Note that there are several very conservative assumptions that are utilized in RLE's calc. They assume that their processing fee is only $.78/bbl., which assumes that they get no better a deal than the one they have given EOG on their first commercial system in NM. I believe their average per-barrel charge will end up to be quite a bit higher than this when you take into account that they are going to be working with the SWD firms, whose business models can support paying higher processing fees. Secondly, their cost assumption of $2M per unit does not take into account expected "learning curve" benefits that would accrue once they create some sort of "assembly line" to start building these suckers en masse. Neither does it take into account the ~$300k/unit savings that would accrue if they successfully conclude the acquisition of one of their suppliers that was described in my prior post. With just a few days' trading it seems that we have already soaked up all the "flippers" that bought into the deal. The fact that the overallotment option got exercised immediately is clear evidence that the deal was oversubscribed of course, quite a feat in the current market. I don't see any further impediments to the stock price appreciation coming from the capital structure for quite awhile. Some may be spooked by the fact that about 3M warrants that are exerciseable at $.25 expire in about 2 months, but given that the large bulk of these are held by current management and/or directors I'm not all that worried about that. Given the news that I'm expecting to come out in the next 2 months it probably will turn out to be a good thing to have this additional stock come into the float, to keep the stock price chart from going idiotic again like it did a few months ago.