Amazingly, I still think many people are missing the full implications of "proven-reserves."
Even before we get the details on the new lease acquisitions, Hemi has more oil and more gas than they could pull out of the ground in a decade...
When some folks hear the longs talking about waiting for the sell-out, they seem to think that it just means we're going to wait longer, and that longer=more money. There's more to it than that.
There are people who keep waiting to hear how much Hemi is producing right now. How much oil or gas are they pulling out of the ground right now. Hemi can make all of us wealthy with production. But there's a better way to make MUCH more money, and that's what Hemi is truly aiming for, and what the longs that understand the value of reserves in this plan, are waiting for.
I know I get too wordy too often, but bear with me:
It's like starting your own business and having yourself as the only employee. There are only so many hours in a day, and there's only so much work you can accomplish on your own on a given day... this limits the amount of money you can make. However, if you can start leveraging the knowledge and efforts of others, you can increase the production of your company, but you also increase it's value. After a while you have things like a loyal client base, maybe a patent or two... all sorts of things that are not a direct product, but that add value to your company. When you go to sell your company, you get more money for it than the value of how much you can produce in a day.
Not a great analogy... but hopefully it made sense, or will make sense shortly.
Hemi Energy can work their fingers to the bone out in the field, and do really well with a steady revenue stream... most would call it very lucrative. And this is as far as many investors are seeing. They want to use production as the determining factor on Hemi's value.
But Hemi Energy can only work so many wells, and can only pump so much petroleum no matter how hard they work at it. It would take many, many years of growing and working harder and harder to get even a majority of the oil and gas out of the ground that they already have available, and/or will soon have.
But IMO, the real, larger value lies in the oil and gas that they will have, but will not extract. That is the larger portion of Hemi's value. It is almost unfathomably huge as it is, and they're still aquiring more leases. They don't have to pump it out of the ground for it to be valuable. They need to pump oil, and gas, to pay for continued growth and operations, and more leases... but they don't need to pump massive amounts to impress "big oil"... they only have to prove to big oil that they HAVE the oil and gas.... that the reserves are proven. Hemi will get paid for all that oil and gas when they sell out to big oil, without having to extract it all.
Acquiring leases, and proving reserves is more important than extracting them.
Day-to-day, yes, production can be important. It's needed. But the short-sighted are missing the big picture when that's where they think the money is.
Nope... the REAL money is in the end-game... at the sale to big oil. That is going to be bigger than I think I can even really wrap my mind around.
All in my opinion of course.
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