"""more transparency makes sense during mid to late 2009."
I agree. KAA said a long time ago that he would keep his cards on the table. I wonder why he said one thing then did another?
Just an honest question about what KAA himself said.""
--My guess on this one is timing. When best to show the cards. But yes, short of a near term buyout, investors will need more transparency to "do the math". Again, I'm betting Hemi will surprise.
Regarding being undervalued.... Well, as with many pinks, we don't get the full picture. But I have a WAG based on available info. Here's how I lay it out....
1) Tight ship with low expenses. I've taken the time to sit in Keith's office and am satisfied that they are keeping things as lean as possible (except that new Ferrari in the parking lot. jk). I've seen enough to back up what is said in the PRs about debt free and cash flow positive, even without knowing the exact production numbers. I can't prove this to you, but I've proven it to myself, at least enough. This alone is worth more than most pink sheet companies. Most momo plays aren't even making money, but rather saying that they plan to.
2) Real company pumping real oil, and sitting on real reserves.
3) They've done a good job of securing key leases in a very good area of SEK. Additionally, they've done well securing other leases in the past that add value to their portfolio. The WY lease sale amount surprised everybody. Keith has mentioned to me in the past, in passing "People just don't know what we have". The WY lease sale showed me what he meant. The ND leases are valued higher, possibly 2X. Who knows what the Tarrant Co., Sabine, and other leases are worth? My guess is more than $50 which is about what the current pps is placing their value at.
4) Relatively low share structure. 100m AS is pretty good, and Hemi has made good, frugal use of shares thus far. Further, I feel fairly confident that the AS will not increase (other than some disaster). I asked Keith about this recently and his answer was sufficient for me.
5) Partial reserve report alone gives some good insights to potential value.
2.15m proven @$25ea = $5.375m / 75m OS = $.72 per share
This report only covers some leases and has NO gas. I gave no value to "probable" but in a buyout there is some value placed on those as well. I am being very conservative with this. My guess is that the oil number doubles and then gas adds more to it with the updated report. Even if no gas is added and we can't get NG to market, it is clearly undervalued. Additional wells will speed up the extraction process if that is the goal. Or leave it there for a buyout.
6) Potential. After all, this is an "emerging" oil and gas play. And Hemi is moving forward. The horizontal drill potentially adds more production which can further facilitate future drills (near Collins?).
7) Most here believe oil will increase in value over the next several years.
That about sums it up. Sorry for the long post.
