From this latest announcement and previous ones, I will attempt to extrapolate future earnings.
So, current production from 1 Aug 2011- 3500 bopd increasing to 10,000 bopd by Dec 2011, then increasing to 20,000 bopd min by Dec 2012, then increasing to 100,000 bopd by June 2016.
Aug 2011 3,500pd, Sept 3,500pd, Oct 5,000pd, Nov 7,500pd, Dec 10,000 pd Total 883500
with only 24 days production in Dec. Also only 24 days production in Jan & Dec 2012.
Jan 2012 10,000pd, Feb & Mar 12,000pd, Apr & May 14,000pd, Jun & Jul 16,000pd, Aug & Sep 18,000 pd
Oct&Nov19,000pd,Dec20,000pd Total 5,515,000
So total production from Aug 2011 to Dec 2012 = 6,398,500
At $100 per boo & costs @ $40 boo 6,398,500 X $60 = $383,910,000
With say an adjusted purchase price of say $240M & therefore borrowings of $180M with interest only at 5%pa until maturity in Dec 2012, then interest- 180M X 5%pa for 1yr 5 mths = $12.75M + repayt of 180 M = $192.75
So profit is $192.75M EBITA for 17mths oil production in USA on LNC capital of only $60M
I realise that I haven't accounted for the extra funding required for expansion as it would normally be drawn down progressivley. If the entire $60M ($300M- $240M) is drawn down then the interest would be less than $4M. So $192.75M less $64M is $128.75M EBITA
Using the same sale price and cost price for a barrel of oil, then I believe the following is achievable-
6 Mths to June 2013 - $60 gross profit X12000 booX 175 days = $126M
12Mths to June 2014 $60 gross profit X 14,000 boo X 350 days = $294M
12 Mths to June 2015 $60 gross profit X 18,000 boo X 350 days = $378M
12 mths to June 2016 $60 gross profit X 20,000 boo X 350 days = $420M
Total profit over 3.5 yrs $1,218M EBITA
I consider that this is a conservative estimate of potential earnings and not realised by the general investor. Perhaps RBS will assist to correct with regular Broker reports.
I welcome any discussion on this estimate.
LNC Holder
Whilst you should be congratulated for attempting to do the calcs, the more I look at this Company the more opportunities I see for it. Many of these cannot be quantified atm. Here are a few that leap to mind. Use of UCG cavities for CC, arrangements with AFC Fuel Cells, more discoveries of oil, capital gains from buying an selling other coal reserves which no one else can use, Deals in China and India, the list just is so very long.
thanx DOGEATDOGWhilst I'm in total agreement with you m35, I feel on a knifes edge with the current global situation.
Sitting here watching the tail end of trading in Europe, and the opening of the North American market. It's not good, unless ones portfolio is primarly short.
Confirmation of the next tenement sale, please PB......Fingers crossed.
LNC holder.
thanx DOGEATDOG
What I find amazing is that anyone ever bought Greek bonds. Greece has widely been known as corrupt and badly run. Also nearly all of Europe has been mugged by socialist politicians wasting our money. As Margaret Thatcher once said "The trouble with socialism is that, quite soon, you run out of other peoples money!"
I personally feel Linc is a very safe share. It has huge coal reserves that very few other people can use, it is a leader in UCG, it is a leader in GTL technology, it is getting on well in Carbon capture, and it owns 12.5% of AFC whose fuel cell is highly likely to be demonstrated as a world beater to rival the steam turbine. It is also a 0ne bagger for me which gives a nice cushion in case of a world flight from shares. I see short-termism as more dangerous than long-termism. But I am a great believer in diversity and hold about 40 different shares in my portfolio.
Pretty ugly alround. I think market sentiment has a lot to do with the fall. There is a smell of fear around the place.
I think the short sellers would also be getting into the market at this stage.
On a practical sense LNC is not going to fall over with $300m + in the bank and (hopefully) some actual oil revenue coming within the next few months. It would be great though to tick off the Teresa coal sale and really get cashed up
In the longer term though I wouldn't be surprised if all stocks stagnate or fall almost regardless of actual achievements. The overall financial structures around the world are problematical and it is very hard to see a return to the (mindless ?) optimism we had pre GFC.
In my view I think companies will have to be very collaborative and very creative to stay attractive to the investing public. LNC has always kept a high public profile and I suspect it will need to keep this up and in fact expand these efforts in the face of general market difficulties.
on the back of the latest acquisition in Alaska, RBS has upgraded its target price from $3.25 to $3.75 based on a higher earnings estimate.
This firm have $3.75 as of 23rd June report.
short term 0 - 60 days
"revised valuation includes very conservative outcomes
…large upside potential if LNC can deliver any oil, let alone 50,000bpd"
i found this link to a detailed report on another site, here:
http://www.megaupload.com/?d=2ENSFGAG
3.75 in 60 days? optimistic... but would be nice
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