SDX.v, 60% discounted Egypt oil player vs. TGA(TGL.to)
TGL.to(TransGlobe Energy Corporation) currently prodcues 11,779 bbl per day, and projects to produce 18,0000 bbl per day next year where about 70% and 30% production will come from Egypt and Yemen respectively. TGL currently is traded at $9.43 with market capitalization of $688 million. But before Yemen experienced political turmoil last March, TGL was traded about $15 with market capitalization of $1,100 million.
With just announed new acquizition plus current oil production, SDX.v projects to produce about $9,0000 bbl per day next year, half of TGL's. All SDX's oil production is located in Egypt which does not have political turmoil like Yemen. Therefore, SDX' fair market capitalization should $550, or half of TGL's $1,100 million.
SDX.v currently has 380 million shares. SDX will issue 350 million new shares for NPC Egypt acquizition, and will issue 300 million to 750 milllion additional new shares for the $75 million equity financing based on issue price 0.1 to 0.25. In the end, SDX will have 1,030 to 1,480 million shares outstanding. Based on its fair market capitalization $550 milllion, SDX share should be traded at 0.37 to 0.53.
Even if use TGL's current depressed market capitalization $688 million in comparison, SDX should have market capitalization $344 millllion and SDX share should be traded at 0.23-0.33.
SDX was traded at 0.095-0.105, over 60% below its minimum fair value after it resumed its trading at 2:30pm yesterday. I guess that it may take time for the market to appreciate the value of new acquizition.
