Bobwins - Thanks for updating your projections. More Canadian investors look at operating cash flows than earnings in determining valuations. Using your forth quarter earnings before future taxes and adding back depreciation and amortization gives a cash flow for the quarter of 30 cents or $1.20 annualized. A 4 multiple on cash flow per share is considered very attractive. In previous hay days for junior oil and gas companies, the cash flow multiple was in the 6 to 10 range; the seniors always bear much higher multiples. Given Rival's generally shallow wells with large decline rates a 3 multiple might be more appropriate but also ultra conservative. Assuming some softening in prices from forth quarter levels an annualized $1.00 of cash flow at the then existing production rates would again be conservative. So 3 times a dollar gives a current conservative value (price) of $3 per share. At $1.65 or thereabouts, a doubling of stock price by the end of 05 seems very plausible, and as we have seen with ASPN and CHAR, once these juniors start going, they go far beyond any conservative estimates. Using a more optimistic scenario (gas prices rise over the winter, investors are prepared to pay a higher multiple for cash flows, Rival has exploration success in its new higher impact areas etc.) a price of $5 to $8 a share is not to be ruled out. Balance this against the downside risk? What risk might that be? Think I'll add even more next week. And by the way I love the stock price chart. Thanks once again for your hard work in finding this undervalued company.
