Great stock to watch!!! BIGN and WWNG
Arch Speaks: Hope I dont get banned from Raging Bull for posting this. I would like to add to the speculation by saying I beat we get some can of special Divvy out of this form Royal and the others as they need shareholder bases. GLTA.
It good to be in the no.
Eat,
Now onto your question. In every JV deal, some companies get more, some get less. Royal Pet has assumed the East Texas operations because they paid for them. They got that part of the deal for flipping the funds. The other parts of the deal were LA, Arkansas and West Texas. West Texas and Arkansas we have not got details on yet so I'm unsure how those assets are divided. It looks like we got 100% of LA. Just like Tyche/Hydroslotter get 60% and BIGN gets 40%, just like WW Oil and Gas gets 50% and BIGN gets 50%. The East Texas asset produces double the amount of oil each month and has more land assets and wells to rework but this deal is not too shabby for BIGN. If we were going to gain the East Texas asset it would have came with heavy dilution to existing common shares, most like preferred shares would have been issued for any free cash flow, warrents, it would have been a very toxic deal. Lanaster is concerned about common shares because he gets some when the deal closes, he does not want heavy dilution either. He is looking out for us, this guy is a top notch dude. Rome is not built overnight. BIGN will soon be in a position to gain assets like East Texas, just not right now. The PR failed to elaborate on the details of East Texas and if BIGN will participate in the reworking or drilling of existing/new wells. If we are, I'm sure collectively will we benefit in some of the cash flow from the wells, we just do not own the assets. Similar to Grimes, we do not own Grimes, we lease the sites.
Now, with the deal closing by year end, we'll have 17M in assets, no debt on our balance sheet plus 1.8M in free cash flow from oil sales from the LA field. Depending on whether or not Grimes 3-4 are done and producing similar to Ophelia lets assume they are and that PR will come shortly because remember, this is the board, not Lancaster that runs Grimes. Lancaster is not involved in Grimes. From the (5) wells we have live 1-Charring Cross, 4-Grimes, we have approx. 4500-4900mcfd of gas being sold. BIGN's annual share of this revenue after ROI is 4-5M. Collectively right now we have almost 6M per year or 500K per month in free cash flow.
Tyche is starting an (8) well program in Oklahoma. WW Oil and Gas has two wells live now in Tubbs and is starting a (28) well program. The two wells from Tubbs are bringing in 100 bopd each which equates to 150K per month in BIGN's pocket. Tubbs is expected to achieve 2 additional wells per month for the next 15-20 months. Do the math, but right now we have 650K per month in free cash flow or 7.8M per year in free cash flow. BIGN's current operational costs for the Tyler office and staff run about 800K per year, so let's say 1M per year. Divide 6.8M profit / 375M shares and I come to .018 EPS. At the normal 10X multiple for Oil and Gas stocks I come to .18 cents per share with 375M shares outstanding. This multiple does not factor in the growth potential we have to produce triple that revenue in 2007 due to Grimes and Tubbs alone, let alone the other projects or JV's that will be announced in 2007. Just the 28 wells in Tubbs alone, assume 20 of them are good producers 100 bopd (which is low, but average), this brings in another 1.5M in cash flow or .004 cent per share EPS which adds another 4 cents to our share price assuming the 10X multiple.
Notice the mention of pink sheet classification meeting highest standard in 2007. Read the news on pinksheets.com regarding this elective categorization for comapnies. This means we must produce audited quaterly and annual financials, exhibit a true business, and report everything to the SEC. Once this is acheived, this factor alone tells the investors in pinks this is a formal, honest company trying to emerge to a higher market. This is worth a premium just like SLJB went up to .20 cents based on the "promise" of audited financials from the CEO. A promise is one thing, promises can be broken evident by SLJB's failure to disclose them if they even exist. People lost 75% of their money on that stock in two days. Ouch.
Now you asked me about East Texas and the fact we did not get it. So what, we got other parts of the deal and remember I'm sure we will be involved in the reworking on wells in East Texas, Arkansas and West Texas that were announced on 8/31.
We have Tubbs and New Mexico with WWNG, we have Oklahoma and Charring Cross with Tyche getting 40% from those deals. We own 37% of Tyche plus get 40% of revenues from projects. With WWNG, we don't own any of this company but get 50% of revenues from projects associated with WW Oil and Gas.
Now assume the company gets 4M in cash early next January and the stock price is sitting at .05-.06 cents per share. The company could right then, right there spend 2M dollars on an immediate buyback put 40M shares of common stock on their balance sheet. Remember this money is cash, not the money being generated from free cash flow from projects. We are getting 4M in cash from this deal. Now with free cash flow still at 6.8M / 335M shares = .0202 EPS at 10X multiple = .205 cents per share. The company can just use the revenues from Tubbs each year to add .004 cents per share to our EPS without touching the 6.8M in cash flow we currently have from LA, the two wells at Tubbs and Grimes + Charring Cross.
All I can say is Lancaster has us started in the right direction. We just need to close this deal by year end, get our name change, start executing with Tubbs, get a report on Grimes and this stock is simply an easy 20X bagger from here in the next 90 days. Hold it longer who knows. Remember the pink sheet classification will add a premium as well to our share price as will more wells at Grimes, Charring Cross or any new deals on the horizon.
- Later
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