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Re: Confusing Value with Price - True. But.. Production value vs. sales valueI think we should learn to adapt ourselves to accept critical views, if anything that lesson should be learned by anyone reading this board here that suffered through the consequences of ignoring it. That said the situation is a bit more nuanced if you assume the restructuring goes ahead, which according to page 7 is not a sure thing. Anyway you believe oil price in the next 6-12 months will be between $ 60 - $ 70. Let's take the low end of that range for the duration of the 2 PDP reserves. For the rest I accept your assumptions ignoring cash to get Orlando online and pay back what's owed. Further of First Energy's report of 3.5 mln 2P, I'll leave 3 mln to account for production up til now and some impairment because of price and don't include water injection upside. Further I add 50% to H Q2 opex because of declines and add $ 3 us to the expected $ 15 opex for Orlando as safety margin. And revenue is tax sheltered. Production Value of the assets: Huntington 3 mln x $ 30 = $ 90 mln Orlando 6.3 x $ 45 = $ 283,5 mln Since these are not long life fields and Orlando will produce fast the NPV 10 taken over 5 years is roughly $ 280. Minus let's say $ 130 debt to allow for 1 year PIK and assume they have sorted different debt by then. Residual shareholder value then is $ 150 mln or ~ $ 0,05 per share. This also explains why it's rational to diversify as there's many companies with more upside and far less risk in the market. Ofc there's many other assumptions you can make (I for one believe we will see an oil price spike again at some point) and this excludes deals but if you add those deals you'll probably get to the ~ $ 0,08 I mentioned before, maybe $ 0,10 at the outside. For this lot's and lot's needs to go right. So my view is $ 0,025 is about right now, maybe a little bit more when the restructuring is done. Do ppl know many other companies right now that still note at an 'about right' value? R. |
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Msg # | Subject | Author | Recs | Date Posted |
15431 | Re: Confusing Value with Price - True. But.. Production value vs. sales value | GHH | 3 | 8/29/2015 5:06:55 AM |