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Re: tuscadeep post# 15

Wednesday, 12/06/2006 10:47:44 AM

Wednesday, December 06, 2006 10:47:44 AM

Post# of 35
Questions Regarding BLMC Valuation:

1. The key to understanding the future value of BLMC is in understanding the results of the 3D seismic shot by TMR. While the results of BLMC's analysis are not public, we do know that TMR has decided not to continue drilling on BLMC property. There are a couple of conclusions one might draw from TMR's decision: i) there is not enough remaining gas on BLMC property to make a further drilling investment despite all the infrastructure and investment they have made or ii) TMR's survey which extended beyond BLMC's property showed greater drilling potential outside of BLMC's land than inside their property so TMR went to "greener" pastures.

2. Notwithstanding page 43 of the 1994 "US Fish and Wildlife Service 1994 Draft" in identifying the sale value for wetlands, on what basis is wetlands without any mineral rights worth $300-$400 per acre? Who would pay this price? Are all 90,000 acres of equal value? Have you spoken to any real estate brokers as to the market price of wetlands located both close to shore and far from shore to obatin a "sanity check" on this valuation estimate?

3. How does government money invested in the restoration of wetlands give those wetlands any commercial value to BLMC or someone wishing to buy those acres from BLMC?

4. Not knowing if i) TMR's 2.3TCF becomes a "discovery" ii) that this discovery goes onto BLMC land and iii) the results of the 3D seismic performed on BLMC's land collectively makes an investment in BLMC a speculative play not a value investment. I see the tangible value of BLMC as approxiamtely $28.00 per share determined as follows:
As of 9/30/06
~$18.0mm Cash and equivalents plus gains (aftertax)
~$16.8mm Aftertax PV of the Possessory Action Suit assuming (100% probability of success an aggressive assumption, 2 yrs. to resolve, 4% per year interest income on funds held in trust, $legal costs of $1mm, 10% discount rate and 33.7% tax rate)
~$32.8mm of value in remainig proven reserves (Tuscadeep's original assumption)
~$10.4mm Aftertax PV of leasing 100% of the remaining 81,800 acres of unleased land assuming acres are leased evenly over 10 years with lease rates growing at 4% per year from a starting average base lease rate of $265/acre, 33% tax rate and a 10% discount rate.

I have not put any value of on the future gas potential of the BLMC property beyond the current proven reserves as this would be "speculative." If the results of the 3D seismic were to show significant gas reserves, then of course this could become a "value play" assuming the stock price did not appreciate to reflect the value of the known reserves.

I would welcome everyone's feedback on this rough analysis.