AI
Monday, October 09, 2017 7:06:19 PM
Update on revenue model
the build in production flow decline, as widely known and also stated by company via their cumulative MBO in presentation:
(See also this data source)
Knowing the royalty interest about to be 25% and using the low average working interest of 18.6% we end up with around 14% net revenue interest.
Adding above hyperbolic decline bottoming out in the 3rd year and giving 80%+ within the first months we end up with the following conservative estimate.
Note that 2017 has the 2 soon to be connected and producing wells already payed off, hence the remaining new 2 wells for 2017 as mentioned in October presentation are left open.
Note that D&C costs are being payed in three tranches, upfront, at drilling completion and one month afterwards.
The D&C deficit up-until 2018 of around $5M is covered by the remaining cash, ATM and Warrants - used up until end of 2018 at higher stock prices. Cash flow positive is expected 2018 and profits 2019.
Evaluation is usually based on cash flow, BOE production numbers etc, depending on development stage, credibility of projection a multiple of 5-20 shall apply on the gross-sales. This should allow a stock price support of $1.20/sh in early 2018 fully diluted. Surely market needs to give company the credibility executing their plan.
Company is debt free.
Addition bonus: Currently worthless Columbia assets might be monetized as soon as the political environment allows.
Next very short term catalyst: Connection and production of the 2 completed wells.
Company may elaborate on the model of their plans and disclose more details having the 2 wells producing.
KUDOS as usual goes to 01 for mining and preparing the data as well to talking with company officials, incl the CEO
the build in production flow decline, as widely known and also stated by company via their cumulative MBO in presentation:
(See also this data source)
Knowing the royalty interest about to be 25% and using the low average working interest of 18.6% we end up with around 14% net revenue interest.
Adding above hyperbolic decline bottoming out in the 3rd year and giving 80%+ within the first months we end up with the following conservative estimate.
Note that 2017 has the 2 soon to be connected and producing wells already payed off, hence the remaining new 2 wells for 2017 as mentioned in October presentation are left open.
Note that D&C costs are being payed in three tranches, upfront, at drilling completion and one month afterwards.
The D&C deficit up-until 2018 of around $5M is covered by the remaining cash, ATM and Warrants - used up until end of 2018 at higher stock prices. Cash flow positive is expected 2018 and profits 2019.
Evaluation is usually based on cash flow, BOE production numbers etc, depending on development stage, credibility of projection a multiple of 5-20 shall apply on the gross-sales. This should allow a stock price support of $1.20/sh in early 2018 fully diluted. Surely market needs to give company the credibility executing their plan.
Company is debt free.
Addition bonus: Currently worthless Columbia assets might be monetized as soon as the political environment allows.
Next very short term catalyst: Connection and production of the 2 completed wells.
Company may elaborate on the model of their plans and disclose more details having the 2 wells producing.
KUDOS as usual goes to 01 for mining and preparing the data as well to talking with company officials, incl the CEO
