BRK - Brookside Energy

[growing]

Re: RFE - Red Fork Energy

Yes indeed Candolini!

Considering also they are in what is considered a safe government environment, there isn't a lot to worry about aside from the usual risks of a company of this type (disclaimer - lol)

Red Fork released another announcement today regarding expected drilling but as you have rightly said it is a long term company, it's just a matter of being patient and waiting for the company results to bear fruit.

 

[growing]

Re: RFE - Red Fork Energy

More GREAT news from Redfork today. Independent certification of reserves will give a solid intrinsic value base to this company including but not limited to its share price

 

[growing]

Re: RFE - Red Fork Energy

Redfork got the CRAP kicked out of it today from $1.17 down to below $1 with a slight recovery back to $1.00 !!

Amazing and for no aparent reason ?

Anyone know ?

 

[Zird]

Re: RFE - Red Fork Energy

My other gas/energy stocks also had a poor day. Could not find anything on RFE web site but it was a big drop. Must be some reason.

 

[Tukker]

Re: RFE - Red Fork Energy

Might be something to do with its competition, I see Sino Gas launched on the exchange yesterday at a discount to its Chinese listing.

Also WHL bounced big with new reports of a bigger than expected find.

The energy company, which is engaged in the development of properties in the United States for oil and natural gas production, said the operation had 110 billion cubic feet of recoverable natural gas.

Lots of supply available at the moment, keeping the market prices moderated.

But more probable is the fact that the share price has risen 700% since March and people are banking profits.

If there is no significant news, then this could be a good technical buy signal for a reversal trade in a few days time. Ill run a few tests when my data comes in.

 

[shoe crew]

Re: RFE - Red Fork Energy

I have not done any numbers on Tulsa yet but heres something for you on East Okalahoma...

Target 200 BCF
each well recoverable .3 BCF
Target to have 10 wells in production by years end
Natural gas price $3.50 per mcf
flow rates per day 300,000 cubic feet, (this is equivalent to 300 mcf)
NRI 81.25%
vertical well costs $150,000 US
production life 20 years
decline rate 8%

To answer the question of what one of these wells is worth over its life time, we can write down the future revenue streams and discount them back to a present value... equivalently we can use the growing Annuity formula to get the same answer... as flow rates are expected to decline by 8% per year, in the formula we put a negative number...

we will first work out the cashflows and then put the answer into the annuity formula, so

300,000 cf is 300mcf
and at $5 per mcf
is $1500 US per day...
note that current market price for mcf is $3.50
I am expecting the longer term price to remain much higher...

...
from that we minus production costs of $1.80 per mcf...
(low cost producer)....

300 *$1.80US= $540 US
$1500-$540=$960 per day,
our Net revenue interest or NRI is 81.25%
960*.8125= $780 US

so $780 per well, per day assuming production of 330 days per year is
$257,400 US per year...

convert to AUS dollars at .8
257,400/.8=$321,750

Now for the growing annuity formula as we want to find the cashflows for this project for its life time, (20 year production)...

Present value of a growing Annuity formula is

PV= C (1/r-g) -(1/r-g)*(1+g/1+r)^t

where PV is the present value
C is the revenue stream per year ($321,750)
r is the interest rate/discount rate (15%)
g is the growth rate (-8%)... production rate declines 8% per year as per company releases
t is time (20 years)

so plug the numbers into the equation

PV= $321,750((1/.15--.08)-(1/.15--.08)*((1-.08)/(1+.15))^20)

If you punch these numbers into a calculator you will get
$321,750 * 4.2978 = $1.383 Million dollars AUS per well over its life time...
so each well costs $150,000 US, and over its life time, of 20 years production the well will earn a total of $1.383 million AUS using a discount rate of 15%...
This discount rate is set fair which corresponds to the level of risk, and the fact that investors need to be compensated a higher rate of return for holding a (risky) development stock...percieved to be risky...


4.2978 is the annuity factor which is multiplied by the period payment of $321,740 per year...
to work through the annuity equation you need to solve the brackets first and there is a double negative in the formula because growth rate is negative with declining production...

So,
IMO getting a million and abit per well, drawn out over 20 years is not exciting when front end payments are involved with drilling costs...
(even though they and production costs are lower than normal standard)....

East Okalahoma is no good, what about Tulsa?
EOK project only works on very large scale..
with 10 well program taking 5 months, and another program planing for next year then this could be a small little earner for the company...
with lofty expenditure requirements in running an oil business, and associated costs (like tax which I never mentioned)...and 700k quarterly admin, then this is not going to be a positive cashflow company, to support a one hundred million dollar market cap....
and grow that cash backing, which is whats required to get a higher market value...
I dont think ive made any mistakes, correct me if im wrong...

 

[Zird]

Re: RFE - Red Fork Energy

Shoe Crew, many thanks for the indepth analysis and review of RFE.
Think I will park my money elsewhere. My gut feeling was to sell a little while ago but also keep a watch on it.

With so much gas being plumbed around the world, even though demand is growing rapidly I wonder what the price of the gas will be in a few years when all the world's wells get into production? Maybe the projected price for gas is optomistic with the euphoria of this 'developing' industry. I have no facts or figures just wondering.

 

[growing]

Re: RFE - Red Fork Energy

Nice looking analysis however I don't think the massive sell off was due to investors suddenly doing some maths and deciding to pull out

the stock recovered a bit today closing at $1.055 doesnt seem to like dropping below $1 .. it was possibly just 1 investor or small group with a lot of shares selling a block for reasons only known to them

 

[growing]

Re: RFE - Red Fork Energy

So now this stock has regained its losses -- must have been a 1 off seller offloading their holding for some reason

 

[Shrewd Crude]

Re: RFE - Red Fork Energy

Hey Zird,
Shoe Crew, many thanks for the indepth analysis and review of RFE.
Think I will park my money elsewhere. My gut feeling was to sell a little while ago but also keep a watch on it.

With so much gas being plumbed around the world, even though demand is growing rapidly I wonder what the price of the gas will be in a few years when all the world's wells get into production? Maybe the projected price for gas is optomistic with the euphoria of this 'developing' industry. I have no facts or figures just wondering.

It is me...
I am back and have been reinstated...
The long term outlook for US nat gas prices is much higher...
Current prices make many projects marginal even RFE's EOK gas development...
we are at those levels where supply is being cut back, and operators choose to delay... this in time will lead to the next upward movement of price as the market takes it cycles, and gas prices remain long term bullish...
The outlook for oil is extremely bullish...
I highly recommend reading 'twilight in the desert'

.^sc

 

[growing]

Re: RFE - Red Fork Energy

It is me...
I am back and have been reinstated...
The long term outlook for US nat gas prices is much higher...
Current prices make many projects marginal even RFE's EOK gas development...
we are at those levels where supply is being cut back, and operators choose to delay... this in time will lead to the next upward movement of price as the market takes it cycles, and gas prices remain long term bullish...
The outlook for oil is extremely bullish...
I highly recommend reading 'twilight in the desert'

.^sc

Had a look at that book, looks like a good read thanks Shrewd Crude

Even with alternative energy vehicles hitting western markets, OIL demand in developing countries will be extreme ..

 

[growing]

Re: RFE - Red Fork Energy

Interestingly, Redfork has recovered very quickly - it must have been a 1 off seller pushing the stock down in recent weeks.

$1.205 with a high of $1.23 happy days

 

[Zird]

Re: RFE - Red Fork Energy

Sorry Guys but I sold up my small RFE parcel and climbed on BAU and SFR. My concern is about the amount of gas projects coming on line all around the world and untill cars and industry start converting to use all this gas I question where the price is going to end up. This is just a gut feeling with no facts or figures to quote. So with a total lack of the latter it is all I can go on. I wonder how much credibility do the hard nut chartists give to Gut feelings? SFA I suppose.

 

[growing]

Re: TRADING HALT

Another Material Acquisition ??

I wonder what affect this will have on the Share Price -- the last one was rather significant albeit involving joint ventures ...

Hmmm Maybe we will see some decent movement

 

[growing]

Re: RFE - Red Fork Energy

Well all we are seeing is downward movement

Maybe interest has moved to blue chip stocks with all this talk of economic recovery -- i must say I'm tempted myself ... never a better time to pick up a blue chip

And they pay dividends while you wait for them to go up

 

[nazzysmith]

Re: RFE - Red Fork Energy

Well the stock is now sitting down around $0.90.

Interested on any bodies thoughts are around the USD impact to this stock.

I do own this stock as along term buy.

I believe the Aus dollar will surpass the USD dollar in value.

Therefore supposing the following where to happen in 2 years time or higher.

(AUD $1.20) = (USD $1.00)

What would be the flow on effect to this stock?

Nazzy

 

[Shrewd Crude]

Re: RFE - Red Fork Energy

nazzy,
dont worry about the flow on effect,
RFE's market value had got way ahead of where it should be...
in time this could be a good stock, but not yet...
EOK flow rates are poor, and these flow rates are not enough to support a higher mcap,
infact a lower mcap...

.^sc

 

[growing]

Re: RFE - Red Fork Energy

The latest broker report i read, place this share having a 12 month target of $4.10 - $4.30 !!

But they were involved in being paid for placements etc etc .. I emailed the Broker asking for an updated report, they said they will release one before the end of calender 2009 however their last report still hold fundamentals which are unchanged ..

This was from Chess Capital and Partners Dated August 2009 ..

 

[growing]

Re: RFE - Red Fork Energy

3 months since my last post on this one .. Is heading up slowly again but I wonder if the weather over there is hampering any efforts ??

 

[growing]

Re: RFE - Red Fork Energy

Haha, Look I know I have posted the last 2 times on his thread but I have to bring to everyone's attention, the hilarious battle going on between that stockanxiety.com guy and one of Red Fork's brokers!!

Makes you wonder if Red Fork have something to hide ???