CHAR: Crunching the numbers: What is the value of CHAR assuming that is valued on the same basis as Nelson is?
Lukoil has offered $2 Billion for Nelson. Based on reserves, that works out to $12.60/bbl of proven reserves, $7.90/bbl of proven and probable reserves and $3.15/bbl of proven+probable+possible reserves (numbers calculated from info in Nelson's annual report and PRs)
Based on Nelson's last quarters numbers which are then annualized, Lukoil would be paying:
4X sales
21X net profits
9x book value
Converting to Char's most recent reported numbers:
Based on 26.5 mil bbls proven reserves, Char is worth $8.78/share
Based on 37.4Mil bbls proven and probable reserves, Char is worth $7.76/ sh
Based on 79.9 mil bbls proven+probable+possible reserves, Char is worth $6.62 share.
Based on 4x annualized second quarter sales, Char is worth $13.90/ share.
Based on 21X net profits, Char is worth $13.60/ share.
(17c/qrtrx4=68cx21= $13.60
Finally, based on book value, Char has a relative value of $1.72x 9=$15.48
Based on all of the above valuation parameters CHAR is undervalued compared to the price offered for Nelson. In some cases it is very undervalued and well worth the risk, IMO.
