Replies to post #4608 on Worthington Energy, Inc. (fka WGASQ)

[xZx]

thanks, badbert, glty, too.

recently i did a back of the napkin calc for the assets listed in the ibox:

Current Assets:

VM 179, 70% Working Interest, Net Revenue Interest 51%.

This is a 547 acre offshore block, located in the Louisiana portion of the Gulf of Mexico, in around 70-72 feet of water. The well's site is adjacent to the Exxon producing lease VM 164. It has proven reserves of 0.582mm bbl oil and 1BCF gas (pv-10 $80M). The Company proposes to drill a 7,400 feet vertical well in Q4, post Hurricane season, with anticipated flow rate of 2,500 bbl / pd.


I-1 well, Block 818-L, Carried Interest 10.35%

This is located near Mustang Island, Kleburg County, Texas. The Company owns a 10.35% carried interest in this well: 8.35% Carried Interest with a 2% Over Riding Royalty Interest over the entire 818-L block. The well is anticipated to be on line by mid-July 2012. The well has a minimum of 5 productive zones throughout the entire well bore and initial production will be from the I-5 sands with perforation between 11,118 and 11,124 feet.


Assets Being Acquired:


D-Bar, 100% Working Interest/Well, Net Revenue Interest/Well 80-85%

This asset is located in the Abilene, Texas area. The Company has executed a Purchase and Sales Agreement (PSA) to acquire 9 shallow oil wells, plus to further drill 5 water injection wells. Along with this, various leases and associated infrastructure owned by D-Bar. Phase 1 will consist of the workover of the 9 shallow oil wells in various formations, with a potential combined production rate of 150-200 bbl/pd. Phase 2 will comprise the development of the entire 3,000 acre position, over 12 leases, with potential towards a 70-90 well workover program. This will include the development of Proven Undeveloped (PUD) locations. The Working Interest per well will be 100% with a Net Revenue Interest per well of between 80 and 85%.


South Texas
The Company is in the final stages of acquiring a producing property in South Texas. The initial plan is to work over 7 existing wells, with a projected cumulative flow rate of 150-175bbl/pd. After the 7 well workover, the Company will conduct a detailed review of a 5 square mile, 3D seismic data package, to minimally drill 17 PUD locations.

let's assume we get the bare minimum from d-bar and the south texas leases, plus we'll assume the mustang island well (I-1 only) produces below expectations. that's still about 450 barrels a day (for all three), which equates to around $20,250 per day NET profit, if you toss out half for costs, about $7.39M annually.

then toss in VM-179, which the company is planning to drill by Q-4, 2012, and we'd have 2,950 boepd, assuming anticipated flow rates are met.

we could knock that down a bit, and say vermillion gives us 2,050 boepd, then all the current leases would yield 2,500 per day. a nice round number.

at today's prices for $WTIC, if you tossed out fully half of it as costs of production, then we'd net $41M a year. that's NET.

assuming the OS goes up a bit more, to 350M (we're more than 100M shy of that now), here's the math as i see it:

41M net profit/350M OS = .117 eps. give it a 10 pe, which is conservative (most of our competitors trade at least at a 15 multiple), and we're at $1.17 per share. by Q1 of 2013, if management hits their goals, and so far they are right on schedule.

$1.17 a share is 130X higher than today's close. that's why i was a volume buyer of WGAS today.