A realistic valuation for LTS
Post a Bakken sale for $1.3 billion, which I think would be a reasonable number based on reserves, production and the current environment (it is a buyer`s market and everyone knows LTS is distressed), we would be left with $300 million in debt. We would still produce 21,368 boe/day, but declining faster and more gassy. With debt no longer an issue but, considering management perception in the marketplace I would imagine that such company would trade at around $55,000 per boe/d or $4.35 a share. $55,000 may seem low to some, but who will stick around to see how some of the proceeds will be redeployed under the same management? It may be high actually and we may grind from $40,000 per boe/d or $2.75 a share to that number in 6 months or so if they don`t screw up something. So yes, selling the whole thing is much better for us shareholders. We can then redeploy the more or less $3 a share whatever way we choose.