Yangarra Resources Ltd T.YGR

OFS Group Valuation?

[margaritaman]

Any thoughts on what sort of valuation could be applied to the OFS group if it was carved out. Not much detail available from YGR.

[Hendrick3]

Really interesting question. I was told the OFS group saves them about $1 million per well. They can assist on 40 wells per year so $40 million savings. Let's conservatively say $25 million per year to take into account capital and maintenance requirements of the group. Using a 4x multiple of that cash flow is $100 million which again is conservative or about $1 per share. I would appreciate

[pennydredful]

I suggested  to  Jim perhaps   a year  ago  that they  spin  this out  as  a seperate company.  He said  it   wouldn't   work  without  too  much  explanation. I   think  his thinking  was  that  other  competitors  would  not want to use its services

[margaritaman]

If I were to use TCW as a loose proxy (just havin fun here!) I would see after tax earnings of about $6M on revenue of $40M. Applying a similar multiple as TCW receives (7.7 x) , YGR OFS would have a valuation of $30M based on the revenue you have suggested. Whether it's $30M or $100M or something in between it just makes YGR look a whole lot cheaper. 

[kavern23]

Without being attached to Ygr for guaranteed work...an ofs company independent from ygr is going to struggle with why smaller energy service have went under during the boom and bust cycle...the cyclical nature of oil and gas activity make it hard on service side. buy all this iron and no guarantee of work. It makes sense for Ygr as their long term plan seems to be continued drilling programs...so

[pennydredful]

Jim   said  the  OFS   is tailored  to  meet   YGR   needs   so   one   could   say  it   is   a round  hole  compared  to  a square  box    that    others   might  need.