Back of the envelope calcs All just my opinion, so take it for what it's worth, but it's fun to think about.
For something close to the first well I have the following math. Should we be lucky enough to have that be "average", which based on results in the area is a fair statement so far.
2500 boe per day on test. Let's say 1250 boe per day on production. About half oil and half gas. (donnycreek's condensate is 51 API light oil).
1250 x 50% = 625 boe per day.
At 50/50 oil/gas let's use a $30 netback after costs, which i think may be low given how oily this is.
So 625 x $30 = $18,750/day = $560,000/month
Declines are typically steep in resource plays, but there's a lot of pressure here and I've already cut the well in half relative to the test rate.
$560,000/month x 12 = $7,800,000 net to Donnycreek per year. I'm going to call that conservative. So the wells look like they pay out in a year (net cost to their 50% is $4,500,000 all-in).
They'll have 2 wells down by October and the second one should be tested by Dec and could be onstream very soonafter. At that point, Donnycreek will be doing something close to $1 million per month in cash flow.
I'm sure the big boys will kick some more dough in at the right level to get a couple more wells drilled by spring. That'll be maybe 5 million shares of dilution if you assume it happens at 2 bucks.
That would be 4 wells. At that point, Donnycreek would be doing something close to $2 million a month in cash flow, which means that it can drill a well every 2-3 months without needing any more dough from the capital markets.
It'll grow like a weed while growing reserves. Speaking of reserves, CLT shows Kakwa wells as having 2P reserves of 0.8 million boe/well and almost 80% of that is oil. They talk about 4-8 wells per section too. So that means 3.2-6.4 million barrels per section.
Donnycreek has 8 net sections. So that's 25 to 50 million boe of 2P reserves on the table. Lots of work to do, but this is a resource play after all.
Why do you think Petronas paid so much for PRQ? 2 words: RESOURCE PLAY. And we have one here that's even balanced between oil and gas. Even better.
Current fully diluted shares out is 25-ish. Stock is $1.30 and there's $8 million in cash. That means the company is valued at $24mm. That's $1 per 2P prospective boe on the low end. One dollar!
With development, which Donnycreek will be able to fund all by itself soon enough, they can prove up those barrels and barrels like that are easily worth $10/boe on a 2P basis.
That's $250-500mm in value on 32, maybe 35, million shares. That's in the $8-16 range.
Not saying we will get there overnight, but it's still early days. I think $2.50 into year-end as was suggested here would be a nice start.
Again, this is just back of the envelope dreaming and my own starry-eyed opinion based on some quick work. If i was motivated enough to build a spreadsheet, i would, but for now it's clear that there's plenty of run way and that's good enough for me.