GREY:RDWEF - Post by User
Post by
archimedes0070on Feb 19, 2011 3:01am
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Post# 18163088
Undervalued
UndervaluedAs per the 2011.02.17 presentation, we can run the numbers in various ways, six ways to Sunday and it's clear RED is likely undervalued.
RED MC ~10m fully diluted.
The following are a few back-of-the-envelope valuations. Yes, there are many assumptions built into these calculations, and they are very simplistic, but they are a start.
1) Given the price that acres in the Redwater Viking area are selling for ($1,650) and that there are ~640 acres to a section and the fact that RED has > 50 sections:
$1,650 * 640 * 50 => $52.8m
2) WFE.T is also in the Redwater Viking area and is a Sprott (among others) favourite. WFE has forecasted 2011 exit production of ~4,000 boe. RED has ~400 boe. WFE MC ~$365m. 10% of 365m = $36.5m.
An argument could be made that RED is worth $36.5m - $52.8m. With RED currently at $10m it looks like a buy.
Given the quality management with a track record of success, 2011 looks promising for RED.