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Re: CSykes post# 10371

Tuesday, 05/01/2007 8:58:38 AM

Tuesday, May 01, 2007 8:58:38 AM

Post# of 132530
$0.028 definitely is WORST CASE scenario in my opinion. When you look at the facts such as you have, it's so easy to see how ridiculousy undervalued we are.

Your projection is also using a maxed out A/S. If we were using the O/S and had a multiple of 10 Worst Case would be $0.056. In any case we should be at minimum 3x the current PPS and we should be there very soon IMO.

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"Initial production rates from the 119 wells drilled on the 320-acre lease ranged from 5 to 60 barrels of oil per day. The reserve report estimated that only a small percentage of the original oil in place under the lease had been produced. Estimates of remaining recoverable oil reserves range from a low of 600,000 barrels of oil to a high of 1,200,000 barrels of oil if complete secondary and tertiary oil recovery projects are implemented. Utilizing the current $60 price of a barrel of oil yields a recoverable gross oil reserve value of $36-72 million

So once the rework of each well has been done in theory from this one lease alone we will have 119 wells. We take 119 wells and multiply by 2.2 which is the average daily yeild of marginal wells in Oklahoma.

119 X 2.2 = 261.8

Now we take the current price of sour which is the worse posible product that could be recovered which is currently $51 a barrel. Now we subtract the known average per barrel cost of $20.96 from $51.

$51.00 - $20.96 = $30.04

Now we have our profit margin per barrel. We can now take our known daily production of 261.8 barrels multiplied by $30.04

261.8 X $30.04 = $7,864.47 per day in profit.

365 X $7,864.47 = $2,870,532.28 in profit per year.

Thats figuring only 1 lease and using the worse posible grade brought to market.

$2.8M / 1 Billion A/S = .0028 EPS X 10 = .028 PPS.

This is an EXTREMLY worse case scenario projection. So with the information we have avalible to us it's evident that the stock is fundamentaly undervalued. It's indepth DD like this that helps a person find that gem in the rough.
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