TheDane, I wouldn't say predicting $2-3 is bashing...
But given given the oil content projections of the JDZ and the percentages and carries ERHE has earned, saying it will trade at $2-3 in 3 YEARS most certainly is!
In 3 years this company will have proven oil in significant quantities in blocks 2, 3, & 4 with full carries to production.
Barring unforseen Dusters this stock will NOT be trading at $2-3 in three years. Merdian's projection is based sole on what we know today. With what we know today he is right, this stock should be $2-3. But three years from now?
Meridian does not factor in the future. His approach is similar to me approaching a bank looking for $500K for a new house. I tell the bank I don't have any assets and family income is < $100K, but my rich Aunt is terminally ill and I expect a huge inheritance soon.
Do I get the loan? (valuation) No. My current assets don't support that kind of loan (valuation).
Meridian's valuation is an ultra conservative banker view of the future. He's taking the "show me" approach. Until you show me, what is known values ERHE at $2-3.
Stock markets don't work that way. Stocks trade on potential a lot of the time. As this year goes on we will see a rig move into one of our blocks and our "potential" of finding known reserves goes up.
So will the stock.
As those reserves are found, our Assets go up, and then we start trading on "potential" again. As more rigs move (or move in) the potential of finding more reserves goes up .
And so will the stock.
Meridian is just trying to keep everyone ground in reality. In reality our balance sheet and PSC's indicate we should be $2-3.
Until that changes, that's all Meridian said. Until rigs move in and known assets change. That's all he said. I agree woleheartedly that in three years this will be a $20-30 stock or more, but you never know. World events could prevent rigs from ever producing oil in the JDZ and three years from now ERHE COULD be a $2-3 stock.
That's all Meridian said. He's completely wrong, of course! But that's all he said. "Show me."
ERHC's share of JDZ oil; 1 billion barrels. Once proven, ERHE will be $10+. All we need is time and patience.
Nuf said.
