Zion Oil & Gas Inc (ZNOG)

[KyOil]

tisdal, it all depends on what the reservoir size is and its sustainable growth.

For illustration, consider two cases. In both cases assume that amount of oil produced is per your list by year, which totals 492.75 million barrels of oil (sum of years 2023 through 2027).

Case A. Reservoir size was 500 million announced in 2022 and no further reserves were found by 2027. In this case, the 2028 production would go to zero and the pps would go to zero as all the value would have been extracted from the reservoir.

Case B. Reservoir size was 500 million announced in 2022 and new reserves of 100 million barrels have been found each year since then. So, by 2028, the initial 500 million barrels found is depleted, but there are 500 million barrels of new reserves (5 years x finding 100 million barrels per year). In this case the market will view Zion as an ongoing business and using the PE calculation would be valid. It would go something like this:
100 million barrels produced per year X $20 earnings per barrel X 6 Price/Earnings /800 million shares = $15 pps.

So, for an exploration company like Zion, the primary factor in establishing the company value is the reservoir size and its consistent growth, or at least its potential for growth.