RE: RE: Recalibrating expectationsIt is highly unlikely MMT will maintain $55K per flowing bbl, let alone see peer group averages. You can buy plays like CEN with significantly better financials/reserves/management/location trading at much lower valuations.
And after years of miserable performance (managerial, not field performance), you'd have to be off your rocker to expect anything close to peer averages.
As for MMT's "guidance", seems many have forgotten recent history - it simply isn't worth the paper it is written on or the breath to utter it. As such, it will take sustained period of time for the market to have much confidence in much that MMT says. And if you are investing on what MMT is saying now, don't say you weren't warned or be disappointed when things inevitably fail to go per plan - combine Nigeria with MMT's miserable history of performance and you shouldn't be surprised when screw ups/delays occur - build them into your expectations. Consider we are "only" 6 months late drilling Umu 6 - despite that blowhard Halpin repeatedly telling everyone that it would spud early Q2.
That said, MMT is priced appropriately and worth a punt at current prices. I rebought most of my
.30+ paper I unloaded a few months ago and still have a large number in some accounts I rarely trade.
As for valuation, EV/flowing is far and away the least useful metric to use - only good when comparing similar companies with similar types and quantities of production. Since there aren't any good comparisons, throw that metric out the window.
The best metric is a combined number using NAV and cash flow - ideally, both should guide to similar valuation targets. 2P NPV10 after tax for Umusedege is $164MM =
.47 fd. With debt, NAV is slightly less.
Reality is MMT needs to find more reserves before the share price will exceed NAV. But with UMU 6 targeting unproduced sands below current production, plus with recompletions/dual completions, there could be a nice bump in reserves - however, that is to be hoped for, not banked on.
Cash flow, based on numbers in the presentation, will comfortably exceed valuation that current NAV implies. We need to see comments from management about reserve additions when news about Umu 6 and the other wells are released. Based on what management is implying, we should see good reserve growth - the question is how much? To see $1 share price, MMT will have to effectively double reserves - it is possible, but will take good drilling success to happen.