Would appreciate shareholder feedback. I know Tchauncy probably understands this investment opportunity better than most of us, but I'm doing some "crystal ball gazing" trying to figure out whether HENC or TN shares is the better investment. I own both, but twice as much HENC in dollar terms.
Looking out to the future, let's see if perhaps we can get some confirmation/non-confirmation on what it will cost TN in additional contributions such that they would earn their full 55% interest, leaving HENC with it's 28% interest and the other 2 partners with their 17% interest?
Here's what I estimate...they'll need roughly $6 million:
1. $4.5 million for 2nd 3-well program
2. $825k for their 55% share of 3D on 444
3. $ 500k incidentals
Could they sell 20 million more units at 30 cents if they have success with the first 2-3 holes? What do you think Tchauncy?
Would they be able to use cash flow(assuming success) from the first 3 wells to fund the second 3 well program...I'm not sure if the timeline would allow for that? Remember, they get an 80% priority payout until they recoup their initial investment of $4.5 million. If possible, that might reduce additional dilution substantially.
Including the last offering of 6.45 million units(1 cs/ 1 wrnt), the total O/S fully diluted approximates 130 million shares now. So, if they can get the $6 million they need by issuing no more than around 30 million more units or 60 million more shares, then they'll have around 200 million shares total O/S.
SO...if this happens, HENC with 115 million shares O/S now @.40 has a mkt cap of 46 million. TN with 200 million shares with the current pps @ .20 would be valued at $40 million YET, they would be earning roughly 2X as much given their 55% earn out vs. 28% by HENC.
Now I know there are a lot of assumptions here, but I think that TN will do whatever it takes for them to earn their full 55% and hopefully keep the total O/S to around 200 million or less.
Using Tchauncy's post #1130 on the valuation of the Brigham Exploration deal and assuming ONLY 28 mbo of P(90) reserves being found, I estimate approximately $8 revenue per share for TN and $7 for HENC making TN (current 20 cents per share going to $8) the better deal (HENC at 40 cents going to $7).
Now for the "drool factor"...what if instead of 28 mbo at P(90) 135 mbo P(10)? Wowser!
