Research report for TDYH 8/29/05
Tandem has built a significant reserve base that has considerable development potential. Assuming completion of all pending acquisitions, proved oil and gas reserves have a PV-10% value estimated to be $250+ million, of which approximately $200 million are proved undeveloped reserves. The properties already
generate cash flow, and there is a significant development budget to enhance results.
The well development program is underway. Management plans to complete 85 wells in 2005 and 125 in 2006, the majority of which are to be relatively shallow, low-risk wells in producing oil and gas fields. Rates of return are expected to be high.
Tandem has significant existing financial resources and will probably opt to supplement these with additional financing. The Company should be cash flow positive from operations for 2005, and it has unused capacity on a new $35 million
credit facility. Management plans to supplement these resources with up to $25 million in new equity financing.
The stock is not well known and appears to have considerable upside potential.
A comparison with five other publicly traded oil and gas companies indicates that the Tandem stock would have to lift several fold for the Company's enterprise value to achieve parity with its peers.
Management plans to apply for listing on the Amex or Nasdaq NMS later this year.
There is no substitute for conducting your own research
