Not exactly, the PR mean't that all shares had been issued. This doesn't mean that all the shares have been converted tho. Someone receieving 504 shares can't sell his shares into the market however they see fit. They can only sell a percentage of the daily volume and can only sell at a price average for a predetermined time period ie: 30% less then the 10 day average or something simliar.
Like I said, it's not about the dillution now but how many were issued. We know that all the shares have been issued. We also know that less than 1B have been issued. So, in order to figure posible PPS projections we have to have a basis to establish earnings and share structure. So we take industry averages and divide by the known wich is 1B authorized to come to a fair market value.
We know that Oklahoma studies have shown that marginal wells produce 2.2 BOPD. We also know that the same study showed that it costs an operator approximatly $20.96 a barrel to bring to market. Before the Iraq invasion oil had gotten as low as $18 a barrel wich made if unprofitable and tax breaks were created to help the small oil producer. However we all know that is not the case now with Oklahoma sweet going for $62.25 a barrel and sour going for $51.00. It's also very probable that Oil prices will exceed $80 a barrel this summer.
So now we have cost basis data. We have known share structure of 1 Billion. We have known cost per barrel and price per barrel so now we only need the missing data to complete the formula.
"Initial production rates from the 119 wells drilled on the 320-acre lease ranged from 5 to 60 barrels of oil per day. The reserve report estimated that only a small percentage of the original oil in place under the lease had been produced. Estimates of remaining recoverable oil reserves range from a low of 600,000 barrels of oil to a high of 1,200,000 barrels of oil if complete secondary and tertiary oil recovery projects are implemented. Utilizing the current $60 price of a barrel of oil yields a recoverable gross oil reserve value of $36-72 million
So once the rework of each well has been done in theory from this one lease alone we will have 119 wells. We take 119 wells and multiply by 2.2 which is the average daily yeild of marginal wells in Oklahoma.
119 X 2.2 = 261.8
Now we take the current price of sour which is the worse posible product that could be recovered which is currently $51 a barrel. Now we subtract the known average per barrel cost of $20.96 from $51.
$51.00 - $20.96 = $30.04
Now we have our profit margin per barrel. We can now take our known daily production of 261.8 barrels multiplied by $30.04
261.8 X $30.04 = $7,864.47 per day in profit.
365 X $7,864.47 = $2,870,532.28 in profit per year.
Thats figuring only 1 lease and using the worse posible grade brought to market.
$2.8M / 1 Billion A/S = .0028 EPS X 10 = .028 PPS.
This is an EXTREMLY worse case scenario projection. So with the information we have avalible to us it's evident that the stock is fundamentaly undervalued. It's indepth DD like this that helps a person find that gem in the rough.
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