I Spoke to Glen Kennedy today, he said a PR would be out on the diamond springs prospect next week. Also he will be putting out a PR on the Texas wells as well. He will also be applying for the bonding and licensing in the state of Texas early next week. He is not just going to throw us a bone next week he will be throwing us steaks. He has really lit a fire under the PR department and the board to get everything done to get this company rolling. Mr Kennedy is very aggressive and is ready to put the drill in the ground.
He said he wants the stock price to go up and hold, he does not want the stock price to go up and drop.
Investment Basis
? Lighthouse Petroleum is a development stage company engaged in the business of identifying,
evaluating, and exploiting potential oil & natural gas wells, with the goal of becoming a commercial
producer. The company is currently focusing their efforts in the Wind River Basin in Wyoming and the
Permian Basin in Texas.
? Our investment rationale for LHPT is based on both the attractiveness of the high operating margins
associated with the company's proposed stripper-well business model, as well as the windfall
opportunity that is presented by the possibility of an oil deposit discovery within the company's Wind
River Basin prospect area. Pending a sufficient capital raise, LHPT plans to acquire up to 20 additional
shut-in wells in the Permian Basin area by 2011, with a total estimated annual production capacity of
43,000 boe (barrel oil equivalent). With management's estimated gross margin realization of approx.
90% on these marginal wells (excluding start up costs), this operating strategy could present significant
future upside for both the company and investors. Lighthouse's 25% working interest in the Diamond
Springs Prospect area in Wyoming's Wind River Basin could open up another significant earnings and
cash flow stream should an oil deposit be discovered/developed there, as the property could offer up
to 75 well locations.
? Our price targets are based on a two pronged approach that determines 2 possible valuations for
LHPT based on a specific set of assumptions, including whether oil is discovered or not. We then
calculate a probability adjusted target price based on management's view of the likelihood of oil
discovery. Our probability adjusted target price of $0.039 is based on an EV/EBITDA2011 multiple of 5.5x
our 2011 EBITDA prob. adj. estimate of $2,781,442 and utilizes a 60% probability of successful drilling
efforts, and subsequent development at Diamond Springs. We incorporate an estimate of fully diluted
shares outstanding of 342,100,000 to account for equity issuance required to meet project financing
goals. Our target multiples are derived from our relative valuation model. Weighing Lighthouse's
attractive growth potential against its relatively weak capital position and numerous other risk factors,
and in consideration of the attractive return potential relative to our target, we rate Lighthouse
Petroleum Speculative Buy.
The price targets presented in this report are based explicitly on a significant number of management’s and our
own estimates and assumptions. Given their associated risk factors, there can be no assurance that our price
targets will be accurate, or whether the assumptions/ estimates regarding actual outcomes will materialize.
