QS Energy Inc (QSEP)

[moorea9]

The reasoning based on the additional profit made by the pipeline (4$ x number of additional gallons) is I think understating the fact that the oil producer is also gaining thanks to the AOT (100$ x number of additional gallons) that would not be pumped out of the ground if it could not be transported.

But if we stay with the conservative reasoning (only considering the pipeline economics), it is true that the leasing formula has many advantages one of them allowing an easy calculation of the pps.

Using the figures of AISI :
42 skids x 12 months x 60,000 $/month = 30 million $/year of revenue for STWA. Profit of 70% = 20 million $/year
Price/earning ratio of 20 means pps of 2.3 $.
This is only for one pipeline, so for 10 pipelines, you have pps of 23$.

NOTE : the 30 millions $/year above can seem a bit high compared to the pipeline revenue of 73 millions $/year , but this is where I would factor in the contribution of the producer for this additional volume, which could be for example translated to a 6$ price/gallon for the additional volume, a small premium ("royalty") compared to the 100$/gallon of increased revenue.