From: “Geoffrey Mundel”
Date: Tues, Jan 3 2006 1:33 am
Subject: FDEG - Seismic confirms presence of significant oil dome structure!
Company: Friendly Energy Inc.
Stock Symbol: OTC: FDEG.PK
Recent Price: $0.05
Target Price: $2.00
Float: 15,000,000
Friendly Energy (OTC: FDEG.PK) is a junior oil & gas exploration company on a verge of major oil field development.
Friendly Energy is a company that is poised to take advantage of the current market pricing of oil and gas that has created new opportunities to bring online proven undeveloped reserves, with very little downside risk to the company. The company’s primary operating philosophy is to develop low risk, high yield, under developed oil and gas reserves utilizing the most current technology available.
This approach will enable the company to capitalize upon previously discovered and proven producing properties with known reserves that have not been completely exploited due to economic conditions.
Friendly Energy has Identified four viable prospects for development.
The first such opportunity that Friendly Energy has identified for further development is the Peach Creek West prospect. Utilizing today’s technologies, there are two separate and distinct economic recovery zones for Friendly Energy to explore and exploit. The first being the recovery of the Hunton , Viola, 1st and 2nd Wilcox zone, and the second being a deeper well to the Pennsylvanian sands geological zones.
What does this mean to the Company?
Based upon the undeveloped reserves figure of 500,000 recoverable barrels of oil per prospect, the following is a breakdown of the valuation of the first prospect Peach Creek West.
Assuming that the planned development program of four target wells per prospect is implemented and successful, then each prospect should produce approximately 500,000 barrels of oil.
Using an un-discounted figure of today’s oil price of approximately $60.00 per barrel, gross revenue per prospect lifetime of $30,000,000.00 would be established. The cost of drilling and completing each well is approximately $650,000.00 giving an un-discounted gross revenue projection for each prospect of $27,400,000.00
Assuming that all targets produce equally, this will provide for un-discounted gross revenue from the four prospects potential reserves of $ 109,600,000.00. Friendly Energy has a 100% working interest and an 87.5% net revenue interest in these wells. The company’s revenue interest would be $95,900,000.00
Utilizing current market and industry valuation trends, this will provide for the following valuation as reflected on the company’s stock price.
Friendly Energy currently has on a Fully Diluted basis: 40,000,000 shares issued and outstanding.
$95,900,000/ 40,000,000 = $2.3975 per share gross revenue potential. The current industry standard has companies trading at a multiple of the per share revenue figures.
Additionally the company will have the ability to book bankable reserves as producing assets.
Using the current pricing of $60.00 per barrel of oil, the potential value of these fields could exceed $95,900,000.00 of oil. This is the first of four major exploration prospects that the company will be developing near term.
Blue Sky Potential
Using the current pricing of $60.00 per barrel of oil, the potential value of these fields could exceed $95,900,000.00 of oil. This is the first of four major exploration prospects that the company will be developing near term.
© R.J. O’Hara 1995–2006
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