Valuation Fundamentals Just so y'all are aware, dr_airtime has your back and likely one of the best predictive capacities of Mart's future earnings because I've definetly spend more time analyzing Mart (biggest holding) as compared to Verbonac or Cormark who must split time to cover several companies.
As others have pointed out, we would only have 4 years of reserves once we get up immediatly to 12,0000 bopd gross, (even less at 15,000 bpod gross which we have capacity to move up to over next couple months). We need a reserve bump (we will) to get our valuation metrics higher otherwise we are an asset with a terminal lifespan.
I called for Q3 $.06 EPS and that is exactly what we got. Mind you, I was off on "pure cash flow" (without change in w/c) but there were a lot of unique hits in Q3 with the new tax regime and $4M gain on the disposal of equipment.
https://www.stockhouse.com/Bullboards/MessageDetail.aspx?s=MMT&t=LIST&m=30372524&l=0&pd=0&r=0
An important takeaway from Q3 is that the production updates coming out from Mart (started in Q3) are on a total days basis, i.e. The July update of 6490 bopd was based on 31 days, but when you look at 7.2 production down-days, average production per producing day (23.8 days) was 8453 bopd. See below and note for future.
https://www.martresources.com/wp-content/uploads/2010/06/21/news-events/August-15-2011-Mart-UMU-8-well-and-July-2011-production-update.pdf
I plan on being around to $2.00+. $1 is going to come easy relative to $2.00 and the dependent factor IMO for $2.00 is the dividend and reserve bump to increase our 2P NPV. The trip from $1-$2 requires you to adopt the institutional mindset.
I'll try to update my Q4/YE predictions and Q1 assuming a ramp-up from 12,000-15,000 bopd over the holidays. I could attempt a 2012 forecast but we are still very undervalued so there is no point until potential Shell pipeline announcement - we are going higher.
Meanwhile, if we annualize Q3 results and compare to current $.92 SP here are our current metrics. It is appropriate to annualize Q3 becuase we have a new tax regime in place (get Wade to explain this at AGM) and our production averaged 7712 bopd so these metrics give you a feel of our downside protection. I can't wait to run Q1 2012:
**EV/FFPO 1.76X
EV CFOpsPure* 1.83X
EV/E 3.53X
P/E 3.69X
Comparing current SP of $.92 to likely 15,000 bpod gross 2-3 months out I would anticipate that the cash flow metrics are currenty about 1.00X and earnings metrics 2.00X.
Like I said. Cheap.
*CFOps Pure = ignore changes in W/C
**EV = Enterprise Value = Market Cap + Third Party Debt (LT+ST) less net WORKING CAPITAL (not just cash)