Athabasca Oil Corp T.ATH

Some fun with math

[Maxmoe]

I had some time this aft so I checked Eric's math he used for his targets and valuation of ATH. Spoiler alert! I think he's being conservative. I assume his data was as of the prior day's close, not up to the instant he spoke. So the raw data is SP=51, o/s=530mm,mkt cap= 270mm, Debt @dec 30 = 859, cash = 165, net debt = 694mm. EV = 270+694= 964mm
now for the fun part. He said at $60 oil his target is 0.93 using a 4x EV/CF multiple and at $70 oil his target is $1.91. So, using the $60 oil deck, and his target of .93, and net debt of 694, and EV of .93x530+694= EV target 694+493=1187 I solve for X and cash flow is 1187\4=$297. Okay, now I'm going to assume the capex constraints are still on and half that cash flow, let's say $150 is used to reduce the net debt from 694 to 544. If EV stays at 1187, the solution is mkt cap raises from 493 to 643. That's a target of not a mere 0.93, but 643/530= $1.21 aka another DOUBLE.
Using his $70 oil price assumption, and plugging in all the same data, I get cash flow increasing from 297 to 427 using his same implied 4x EV/CF, EV is now 4x 427=1708. Now if I can assume, again, that half the cash flow say 213 reduces net debt from 694 to 481, the market cap increases to 1708-481=1227. That my fellow shareholders is a target of 1227\530 = $2.32 aka I'm rounding a 4 BAGGER!

im going to add my own assessment as "AT LEAST". 4x multiple is still REALLY cheap if the oil sector sentiment continues to improve and/or a few more M&A deals get done. 6x or pie in the sky 8x multiples are possible. 8x means at $70 oil using Eric's data, a target of 8x427=3416 EV less net debt of 481= 2935 over 530 shares o/s = $5.54. That's a lot of pie in that there sky.

[ComradeKomissar]

Here for the pie!! Hearing Goldman Sachs expects oil to "sneak" to $80 in the next 4-6 weeks. I wonder if the market will recognize that value.