Hi Slipperz,
Here are my inital calculations. The assumptions are as follows:
The old wells (Harstad #1, Leonard, Sabretooth & State Oil & Gas) + Gas assets have flowed pretty consistently over the last 3 quarters so you can confidently (subject to downtime) est. flow rates
I have added Gene with first 90 days = 350BOPD (think was higher but will stick with this) and then next 90days = 220BOPD (last quarter amounts) - I have then allowed 25% decline a quarter after this as we know Bakken wells decrease over time
I have included Bakken Wells - Gary, Rodney, Earl & Harstad#2 in my caluclations - assuming timelines are met as outlined by the company. R & E have strong oil and gas shows, but waiting on frac. Harstad #2 to be drilled next quarter.
I have assumed the other wells flow similar to Gene, although Gary could be higher - we will find out on 24/11/10 when comes off confidential list
I have used $US80 oil and $US3.6 gas - assume dollar at parity or close to
If I use these figures and the timeline provided by the company (ie 1 month of Rodney production for Dec 10 quarter, E & H#2 staggered in next quarter so not in my Dec 10 calculations):
I will stick my neck out as say I think in December 10 quarter we would be looking at a low point of $2.5m in income and reduced cash burn (based on expenses in Sept 10 quarterly advice by the company). Major cash burn will be the 3-D Sesmic (approx $2m). Gary, Rodney & Earl major costs paid previous quarter(s) so income just starting to flow in from these.
Things that could affect these calculations for Dec 10 quarter:
Diamondback (100%) - not sure what to expect here so have left out, drilling November
Any more information on Gene flow rates to see if 25% decline is a reasonable assumption
Higher production flow rates for Gary
Unknown flow rates for Rodney, confirmation of flow, Delays in frac.
Oil prices continue to rise and effect of $AUD
Left Field Announcements - JV for Niobrara, new acerage purchases (would pefer away from Niobrara as have CHK drilling and our land there already at 43k arces but leave for management to decide)
To me these are positive signs as it shows the cash on hand is slowly being used to generate growing income and cashflow with higher income from a change of focus from gas to oil. While that cash remains strong then the company has the ability to take advantage of many opportunities in front of it at present - looks like they are taking a measured and conservative approach.
March 2011 is when the real action and the potential for this company can be realised very quickly (or not), but I will post more on that when more information comes to hand, this could really be an exciting quarter as follows:
Fully developed Bakken, potential for reduced spacing for Bakken = more wells
CHK Royalty, we will know more
Sale of Gas Assets
Results from Niobrara (first 2 wells) and more information from other operators in the area
As always in this area of the market it carries risks and there are a lot of ifs and maybes, so you need to make your own investment decisions, so do not take this as investment advice to buy, sell or hold just sharing information.
See a good story building with some risk invloved, at this mkt cap (fully diluted around - 1,996m shares - $127m or undiluted (less 330k options at 1.5c) say 1,666m around $107m based on Friday's closing price of 6.4c) it is looking like a good punt to take, rewards could be high and the downside risk reducing with each find - but we will find out more as the story unfolds and that will help confirm my own decisions to continue holding or sell. I wil try to provide some of my own valuations a little later, but will stick with company and other internet posters on that at the moment as I would want to see some more results first of all - I am a pretty conservative investor and also work on what I think is the lowest/realistic outcomes.
Final disclosue I hold this stock in 2 parcels - LT which means waiting for March 11 to unfold and short term trade to take advantage of any dips. I do hold other investments as do not believe in putting all eggs in one basket but I see this investment at the early stages of a solid story unfolding.
I will add more as more information comes in. Welcome any feedback (from anybody) on my assumptions above, including chartists (I am not one) for short term opportunities.
Bit long winded but just wanted to paint a clear picture how I am looking at it at present.