Candax Energy Inc CXEYF

RE: John Clarke on kereport - PE

[CalifDreaming]

The only "complete failure" on this board is your incessant commentary. The onshore workovers were deferred until Q1/Q2 due to rig availabilit. But you knew that, and just plumb forgot, right? The 6MM cfd (1000 boed) to SEEB is barely worth mentioning as it provides little cash flow (about $1MM/yr). SEEB was merely a way to stop flaring at El Bibane when they had one well. Now there's two wells and expect to have excess gas production and thus the need for the NG injection well. There is only minor associated NG production at the other fields. But again, you knew that too, didn't you? CAX has not been given any reserves for the NGLs that will be stripped out of the NG. Clarke has repeatedly stated that they expect about 1MM bbls of condensate to be added to reserves. That's a significant addition of very high netback production. As for $60MM cf at $70 oil, Clarke is being conservative. Running the numbers at $84 where most analysts are calling for ave oil prices in '08, gives $72MM cf. Slap a typical 5x cf multiple = $360MM market cap or $2.13. Use current $100 oil prices and you get a $2.50 target price. And Clarke is ignoring recovery of NGLs in his production estimate, so there is upward cf potential. At this point, I'll take an easy double, but I hope for better. And then there's the upside from Chaal/deep Triassic that is essentially a free option on another $7 share. CAX is easy money at these prices.