Some early morning mental math exercise...
Given: 1. PBLS has around a 82% working interest in the KY leases.
2. The cost to drill a well on the KY leases is $18,000-$20,000 per well.
3. Assume the average life of a producing well at 2 years.
4. Oil price at the well head is $55 and remains constant.
Let's see..a well producing only 5 barrels per day for two years will pump out 5 x 365 x 2 = 3650 barrels.
3650 x $55 = $200,750. 82% of that is $164,615. Original drilling investment cost is $20,000. Approximately $145,000 net return above investment cost over the 2year period for only a 5 barrel/day producer.
PBLS has 18 wells averaging 26 barrels per day on pump presently with others undergoing the drillbit and more to be drilled after those are completed. Pretty amazing how quickly the revenues flow right to the bottom line. Cost of monitoring and maintaining the wells is low because of the wells being located in one area and can be serviced by one person.
Just for the fun of it let's say PBLS drills and completes an additional 10 wells on the KY leases over the next 6 months. And they have a average daily production of only 20 barrels per day and oil price averages $60 per barrel at the wellhead.
28 wells x 20 x 365 = 204,400 barrels on annual basis. Equates to (204,400 x $60 x 82%) gross revenue of $12,264,000. Assign a total drilling and annual maintainence cost of $30,000 per well reduces the gross by $840,000 leaving $11,424,000 net. Geez..that's a little over a penny per share earnings using the full A/S of a billion shares, just by using known numbers and some fairly conservative estimates.
From off the KY oil potential alone, PBLS could post earnings of over a penny a share assuming the other operations just break-even. We know that Progas operates in the black, the pit is a sand and gravel goldmine in the making, construction is booming and will for several more years in NOLA, trucking is rolling gangbusters and the pool business will increase as more rebuilding and restoration moves forward in the Gulfcoast area. Pretty safe assumption, IMO, the other segments of the company will also contribute heavily to the bottom line.
But back to KY oil..an earnings per share of just a penny per share with a P/E of 15 makes PBLS a 15 cent stock on that part of the company alone. About 4 times where we are trading at now.
Looks like a pretty good risk/reward situation to me from the numbers. I continue to buy. Later, Kelly
