Lots of emails and comments asking how the Blog comes up with its figures for 12p a share on Matra petroleum. So here we go it’s a wee bit complicated and
as ever you’re welcome to debate the process.
Calculate the different oip figures 15.1, 30, and 50, million attribute $80 dollars a barrel for the Urals blend (which I’ve HEAVILY discounted) for three different OIP figures, x each oip figure by 80 dollars. For instance 15,100,000 x 80 = 1.2 billion dollars give or take the odd 8 million then divide this by 2 billion etc. Do this for each oip figure, 30 million barrels comes out at approx’ 2.4 billion dollars, 50 million comes in at about 4 billion dollars then divide each figure by shares in issue or shares likely to be in issue ie 2 billion shares after placing etc Take away 80% of the gross figures for oil in place, what you’re left with even at the low case is $300 million dollars in revenue.
Divide the $300 million by 2 billion which leaves 15 cents or approx 12p per share give or take the odd cent and that’s the low case. Or calculate the cash-flow from 1000, 2000, 3000, 4000, 5000 and 6000 bopd. A thousand barrels of oil sold at $80 dollars per barrel = $80,000 gross per day 3,000 bopd equates to $240,000 dollars gross per day, 6,000 bopd comes to $480,000 per day times each one by 365. The high case comes to 175.2 million dollars per year the low case comes to 29.2 million dollars per year on production alone, divide each production cash flow figure by 2 billion then discount the figures by 70%/ or 80% what you’re left with is a range of 20/40 cents per share and remember the oil price is HEAVILY discounted and the calc’s are for A one year production cycle not 4/5! It’s a bit complicated but the equation is clear enough, each share on the “low-case” full production must be worth a minimum of 12p.
A sustained production run over 12/24 months will see the sp hit levels unthought of today. Then there’s the imponderables such as new assets, improved OR new production, increasing oil price, tax breaks, ALL PRODUCTION COSTS ARE OFFSET AGAINST TAX etc If they had been producing 3,000 barrels of oil per day for the last 2 years where would the share price be TODAY? That’s why Delek are fully supportive of the company, the potential here for massive gains once production kicks in is phenomenal. Remember there’s no debt on the company and they own 100% of Soko’ discovery. It’s long been known by the Blog that Matra have deliberately been conservative with the OIP figures. You can bet your bottom that the OIP doubles in 2012 AS PRODUCTION AND NEW SEISMIC ARE ACQUIRED.
Remember Delek are not interested in a $50 million dollar company what they are looking at is a $500 million dollar company. So based on the figures alone it’s obvious why Delek are fully supportive. The case is compelling. As for the funding there’s not an oil company on the AIM that hasn’t farmed out or run an Institutional placing it’s nothing new and it’s certainly not unique to Matra. All companys seek funding as they progress to production. The key here is to hold your stock and not to be swayed by erroneous statements emanating from online morons. Stick with the fundamentals of the oil play. What’s at stake here is a minimum of 1.2 billion dollars in gross revenue. They will and as I write are bouncing back up. Anything under 1.5p is in my opinion an absolute bargain!