I am expecting an RNS on production very shortly. Hopefully we will see a decent rise leading up to the news. I think this is primed to break 1p and reach a much fairer valuation, especially given the rising oil price, as it's still hugely undervalued.
It was very interesting to see the huge rise in the MSMN share price on Friday. I honestly believe NCT has the potential to do the same thing given that the market capitalisation of the company is so low compared to its P1 proven reserves.
I think the catalyst that could lead to a very substantial re-rating of the share price is the drilling of the horizontal Mathis well that is due to spud very soon. It could be announced any time as I believe the permit has been signed off.
This one well has been independently assessed by Moyes & Co. to have a discounted cashflow value (present value after discounting at a 10% interest rate) of $9.7 million - that is after all costs like drilling and operating costs have been deducted. Moyes have estimated the P1 proven reserves of the well to be 200,000 barrels of oil and 1.7 Bsf of natural gas.
The location of the well has been chosen after the acquisition of 3D seismic data. According to the seismic the well is to be drilled into a sweet spot of the oil bearing formation. The well is beside a field that has produced over 1 million barrels of oil and if you look at the seismic map the new well is in a better location to the previous horizontal wells.
If the results are favourable - and I believe that there is a very good chance that they will be very good, given the fact the well has been assigned P1 proven status because of the previous producing wells drilled in the formation - then I do not see why the share price will not react in the same way as the MSMN share price did at the end of last week.
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