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There’s $380 Million Worth Of Value In This Oil Company

Let’s use a simple example to illustrate the point.

*
You assume the long-term oil price averages between say US$80 and US$140 a barrel.

*
You discover a company which is budgeted to produce around 300,000 barrels of oil in 2008, with profit margins after all expenses over US$50 a barrel. That translates into budgeted profits of around $16.5 million. You estimate the value of this existing field at around $120 million.

*
As well as the potential to further develop its existing oilfields, the company has further growth potential from two identified opportunities. One has the potential for one million recoverable barrels of oil, the other is estimated by the company to be worth between $135 million and $200 million. There are significant other growth opportunities too.

*
The company is profitable, has no debt, has $11 million in cash, and is planning on drilling 15 more wells in 2008. It has a respected management team with hundreds of years of collective oil industry experience.

*
In a recent broker presentation, the company itself estimated its total risked potential value to be around $380 million.

What price might you expect to pay for this company with an estimated value of $380 million?

Remember, price is what you pay, value is what you get.

In a “greedy” market, you might expect to pay around $340 million, a modest 10% discount to its estimated value.

In a “normal” market, you might expect to pay around $265 million, a 30% discount to its estimated value.

In a “fearful” market, you might expect to pay around $115 million, a 75% discount to its estimated value.

Would you be prepared to pay $115 million for this company? We’d suggest you’d seriously consider it.

Wake Up Market And Smell The Coffee

By this stage, you’ve probably twigged that this is a real company, a company we recommended our Fat Prophets Mining & Resources Members BUY back in July last year.

In our most recent update to Members, we said…

“When we last covered it we thought the company was a bargain-priced entry then, but over the past few months the story has advance significantly and become more attractive. In the meantime the company’s share price has halved, making the company extraordinary value in our opinion. When will the market wake up and smell the coffee, we ask?â
Click to expand...


Any Ideas?
 
Yes, this would be Salinas Energy SAE. Read their latest presentation which is on their web site - February 2008 - and you will see that there is a "perfect match" with respect to FP's email.

Cheers, JM
 
I would say Petsec Energy (PSA). Market cap is around 117 million and price has halved.
 
I agree, SAE is a better match. Cash position of PSA is different (i.e. they have debt). So SAE it is!
 
Tukker said:
Any Ideas?
Click to expand...

I do have some ideas but I'm unsure how receptive the posters on this thread may be to them.

There is no evidence that brokers or tipsters such as Fat Prophet are any more accurate at predicting future price movements than a monkey tossing a dart at a list of stocks on a board.

You concentrate on stocks from tipsters that fulfil your and their hopes while ignoring the hundreds of tips that if followed would have led people into investing in dogs.

Read this guys webpage and books, his name is Nicholas Taleb and he was a statistician.trader for a number of big broking houses in the US.

It may make you more objective about the future.

http://www.fooledbyrandomness.com/

gg
 
Thank Garpal, ye I totally understand what your saying, I'm a system trader myself, i just enjoy the detective nature of this thread. Its just for fun.

And to be fair to Fat Prophet (which i don't subscribe to), they do fit into the "better than most" analyst group. You really can get some duds.

Cheers
 
Tukker said:
Thank Garpal, ye I totally understand what your saying, I'm a system trader myself, i just enjoy the detective nature of this thread. Its just for fun.

And to be fair to Fat Prophet (which i don't subscribe to), they do fit into the "better than most" analyst group. You really can get some duds.

Cheers
Click to expand...

Yes mate,

Point taken,

I had a mate once in the UK who had a pet monkey, he was fairly well off (my mate that is) and they were both alcoholics. The monkey died from cirrhosis of the liver and my mate followed him to the bourse in the sky a few weeks later with a similar liver condition.

The monkey used pick the stocks, my mate said, by screeching as he listened to my mate read the stocks out.

Rather like the way Rene Rivkin used pick his really, and look how well Rene did.

He'd probably have the RSPCA and the UK equivalent of Today Tonight all over his place now if it happened today.

gg
 
"P.P.P.S. The poor share price performance of the West Australian gold explorer we told you about a few weeks ago continues to stagger us. We have had numerous meetings with their Managing Director, and we must reiterate that in our view the company appears to be doing everything right. We think the current price weakness will soon present an outstanding buying opportunity for astute investors."

Just a guess ... but are they referring to WMT - Western Metals?

sleepy :)
 
Garpal Gumnut said:
Yes mate,

Point taken,

I had a mate once in the UK who had a pet monkey, he was fairly well off (my mate that is) and they were both alcoholics. The monkey died from cirrhosis of the liver and my mate followed him to the bourse in the sky a few weeks later with a similar liver condition.

The monkey used pick the stocks, my mate said, by screeching as he listened to my mate read the stocks out.

Rather like the way Rene Rivkin used pick his really, and look how well Rene did.

He'd probably have the RSPCA and the UK equivalent of Today Tonight all over his place now if it happened today.

gg
Click to expand...

Haha So what your saying is that demand for monkeys is at an all time high in this current market :)

Yea I think its SAE as well. Nice work JMcDog
 
Tukker said:
Haha So what your saying is that demand for monkeys is at an all time high in this current market :)

Yea I think its SAE as well. Nice work JMcDog
Click to expand...

Some monkeys are doing very well in Cricket in IPL India.
The price of those monkeys have outsmarted in auction than many world ranked cricketers.
It is your guess just as to find out the company from FP report !!
 
The Stock Market Is Finally Waking Up To These Cheap Oil Companies

In our view, triple-digit oil prices are here to stay. And based on the recent price movements of some of the Fat Prophets' favourite small to medium sized oil companies, it appears like the market is finally waking up to this new dawn…
April 2008 Low Price Today Change
Small US producer/explorer $0.29* $0.485* UP 67%*
Mid sized Thai producer/explorer $0.455* $0.755* UP 66%*
Mid sized WA explorer/producer $1.545* $2.00* UP 29%*


(All prices taken from Yahoo Finance as at Monday 12th May 2008 close)

Just this week, the small US producer/explorer mentioned above made an announcement saying "…we fully expect production levels at the field to reach record highs within the next few weeks, coinciding with record world oil prices… by more than doubling our production rates in the coming weeks we expect a material increase in our monthly sales revenues."

The mid-sized WA explorer/producer mentioned above is in the middle of a $60 million drilling programme in 2008 pursuing a portfolio of moderate risk, high impact opportunities.

As part of that programme, this month the results of a potentially "game changer" exploration well are due to be released to the market. The company says the drilling result has the potential to see the company's oil and gas reserves increase by a massive 250%.

If they do strike gas in a big way, we'd imagine the shares could take off. The high impact exploration well is drilling as we speak, with results due at the end of May.

You Might Be Able To Pick Up This Oil Explorer On The Cheap

As we mentioned above, not all of our specially selected small and medium oil production and exploration companies have joined in the recent share price fun.

Take the mid-sized oil exploration companywe've previously highlighted here about whom we recently said "…is sure to generate exploration excitement."

The potential oil resource in place in the area they are drilling is estimated to lie somewhere between 6 million and 40 million barrels, with mean oil resources estimated at 20 million barrels.

We first recommended this exciting oil explorer as a BUY in January last year when the shares were $1.64*. We re-recommended them as a BUY in January this year at around the same price, despite the company making excellent progress over the intervening 12 months.

Fast forward to today, and largely courtesy of the sub-prime fall out, the shares currently trade around the $1.05* mark. That is 36%* down on the price we were happy to recommend them as a BUY just a few months ago. It just might turn out to be an excellent opportunity for new investors to buy shares in this company on the cheap.

With $48 million in cash and receivables, all in all, we think this company adds up to an excellent medium-high risk/high reward oil explorer.


Any ideas?
 
Has any1 actually subscribed Fat's reports? I just wonder if these tips in their free weekly letters are the entire collection of their current recommandations or only a few of them. I'm new to their reports. Has any1 tracked the performances of the stocks mentioned in the past letters? thx
 

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