Thought I would share this with the board. A friend of mine sent this to me today. He is also a shareholder of Treaty and often reads this board. Been trying to get him to sign up and post here but no luck so far. I asked him if it would be ok to post this and he said sure:
Bear with me on this analysis -- I picked a company, Chesapeake Energy (CHK) as an example of a firm in the energy sector. According to their most recent earnings, they are currently trading at a multiple of 21x earnings. Let's put that on the shelf for a moment, will revisit a little later in this post.
Based on the Treaty PR today, in the next 12 months, just based on Texas alone, the gross revenue from the drilling program will be approximately $29.2MM on an annual basis. The estimated profit margin would be in the neighborhood of 60% of that figure, or $17.5MM per year. Therefore, we can back into an EPS, or even a book value for Texas alone of around $0.025 per share. Now, lets revisit the CHK multiple at 21x earnings.....and to be fair, let's take a conservative approach and dummy it down by 30%, which would yield an implied multiple of 14x earnings for TECO. You see where I am headed? On Texas production alone, this stock should be trading at 35 cents. Now, hold on, that doesn't factor in any of the current production or potential for Kansas. Most importantly, it doesn't fact in ANYTHING for Belize, which will likely blow Texas out of the water on its first or second wells drilled.
There are a few folks that stop by to entertain us from time to time by attempting to undercut this company. But, the facts do not lie, this company is a fully reporting one; its management is fully transparent and provides timely updates for the shareholders. The management team has positioned this company (and us as shareholders) for success. The coolest part is that we should know a WHOLE LOT MORE in the next 10-15 days, when the drilling in Belize is in full swing.
Now, if that doesn't help the shareholders here feel a little more secure, I don't know what else can.....Hold on for the launch into orbit for the PPS, our stock price is like a tightly wound spring that is just waiting to bound forward. This ride should be a whole lot of fun.
