Newbie here, have 40K shares, found out about it on HealthSouth Yahoo board, decided I liked the prospects and got in, not nearly as cheap as you all but cheap enough IMO. Was originally looking at it as a short term play but now I'm thinking longer.
Tried to do a little math on the prospects. If the three tracts average 500,000 BOPD, ERHE share is 17.7% average, price is $60 per barrel, production cost of $10 per barrel, I see them getting something like $1.6 billion per year once development cost repaid. Not sure how those are accounted for, wouldn't at least some of it be as a capital payback item in the $10 production cost?
Anyway, at a low 10 multiple against roughty $2 per share EPS since it is a Nigerian company, that still comes to a potential $20 per share and a major dividend.
Am I nuts? If I'm not nuts, what is the best guess around here as to how long it will take them to develop this field?
This African gentleman, Mr. Offor, might be also thinking that his company is a perfect vehicle for combining Western and African interests such that they'd have a leg up over the pure outsiders when it comes to developing oil resources elsewhere in Africa. Do you think that's the direction he's headed in?
Thanks to all, this is a very interesting board.
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