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

To: Bearcatbob who wrote (171632)	8/7/2012 2:36:43 PM
From: architect*	4 Recommendations Read Replies (1) \| Respond to of 206178

<What risk characteristics do IOC and MMR share?> IOC and MMR are both elephant hunters. IOC and MMR are both speculative value as they are both valued at a big premium to industry standard cash flow valuation metrics. IOC may be valued at a discount to NPV 10% as reported to the SEC for 2011 year end. 65% to 85% discount to NPV10% is where many junior oil and gas stocks are valued today with a cash flow multiple of 3 - 5 times trailing cash flow . Typically analyst use 50% - 50% weight for cash flow value and NPV 10%. If 50% of valuation weight is near $0 / share then the valuation is speculative when compared to their industry peers that have good cash flow and working capital balances. I'd put Cobalt CIE in that same speculative boat - with $0 revenue. Niko Resources NKO.to is another low revenue junior. Niko's high was $110 / share and Niko recently dipped below their NPV 10% value of $13.21 / share, and share price is now approaching $20 / share a 55% premium to NPV10%. Perhaps rumors or well information is leaking that Niko's current wildcat exploration well in Indonesia has oil stains in the log results. $6.50 / share seems rich to me for oil stains, without commercial oil flow test results. Without current production there are operational risks of how much money will flow out of the wells. BPZ Resources is the classic example of 100 mmbo in reserves and BPZ has never made a nickel in profit on those 100 mmbo. BPZ could have overstated reserves or BPZ could have oil fields that simply require capital investment to produce the 100 mmbo. In five years BPZ hasn't been able to solve the operational issues and produce oil at a profit. Relative to Pacific Rubiales acquisition of BPZ's 2P reserves for $9 /bbl, IMO BPZ still looks very speculative at $2.50 / share.