RE: 6p in 3 months4 Dec 2020 10:02
Redmen, your answer depends on a range of possibilities that are attached to each of the major claims they've made. But the most important two things we don't know is average POO over the next 6 months, and what our b/e price is for Gain. As an example, let's say we start throwing off cash at $40 WTI, then an average of $45 WTI @ circa 10,000boepd would make us circa US$17m fcf annualized. You can double this amount if WTI averages $50. The first example I'd estimate our market value on fcf alone at $100m (in current shaky environment). This is around 2.5x our current Mcap. If WTI is $50 then you can make that $200m Mcap so 5 bag from here. Then there's the f/o. I believe very good terms would be something in the order of 30% for up to 2 x free carried drills and $5m cash (I'm not expecting this btw). This I believe would be valued by the market initially at 5p given the value of the free carry drills and the $5m. This 5p would increase to 7-8p as we near 'spud' and 'discovery value'.
But ultimately the sp 're-set' will come down to our Gain b/e price. Mgt have intimated that we'd throw off cash at $45 so it should be below this level. But mgt have shown themselves to be completely full of **** so the market is sitting and waiting on these numbers. If mgt are proven to be correct and we're making even modest fcf at $45 (say $10m annualized) then we'll still see a decent jump as the market will know that we can still make cash in a relatively low poo environment and we'll re-rate to at a guess 10p. Add a decent f/o and you can see how things could really motor here. Flip side of course is we're making a loss at $45 WTI. Then mgt will have proven themselves to be full of **** (once again), so claims of dividends etc simply become laughable. And tax credits become less valuable as you're not making any profit. Bottom line, we need to be throwing off cash at $45 WTI or sp goes no-where. It could conceivably go backwards if we're making a decent loss at this level as I think most realists don't see WTI averaging $50 or more over the next 12 months - OPEC will simply release more supply when we get near this level.
All back of fag stuff but impossible to estimate unless we know Gain b/e. Given the very low volume it would appear that most people have taken their position and are waiting on this news.
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