RE:RE:RE:RE:Intriguing timing Hi Lev, related to your question:
"If that is the case what is the purchase price per TCF. I read in a Shaw blog that the adage was 1 TCF = 1 Billion. Is that a buyout number versus your we are a producer and seller of it number?"
I am not sure what 1 TCF would be worth on a buyout, but $500 million to $1 billion would certainly be in the ball park as a purchaser would want a good return on its costs and efforts. That said, the figure for the basin can never be only 1 TCF, here is why.
The basin is about 1600 square kilometers and lets assume VLE owns at least 1000 square kilometers of the basin. As there are 247 acres in a square kilometer, VLE would own at least 247,000 acres. Given a drill density of say 40 acres per well, a conservative density. That would be at least 6,000 well locations. If the basin only had 1 TCF of gas, that would work out to only 167 million CF per well. Nobody would want to buy a property that only produced 167 million CF per well, it would be uneconomic. To be economic you need at least 2 billion CF per well and most likely VLE wells will be in the 3 to 5 billion CF per well range based on the current test well. Thus for the basin, a mere 1 TCF is not imaginable.
Based on 2 billion CF per well for 6,000 well location, you get a minimum of 12 TCF of which 50% would belong to VLE. Therefore, I my view, assuming VLE has what it appears to have, its share based on 2 billion TCF per well would be at least 6 TCF and quite likely much higher. So whether the market would pay them 50 cents per TCF or $1 per TCF does not really matter at the moment, as even based on 50 cents per TCF the stock is terribly under-valued. As 50 cents per TCF would be result in a $3 billion buyout. And the current market cap. is in the $400 million range. So lots of upside from here.