RE: losvegasThe boys have hit it right on the head... next time losvegas, before you suggest that I'm misleading anyone, feel free to have a look at the forward curves for UK gas and oil, break out your calculator, and crunch the numbers. It amazes me that more people don't work the numbers themselves for BUK -- it's such a simple company to figure out.
The math is simple and has been covered very well here. BUK plans to hedge the vast majority of their production based on the current forward price curves.
30,000,000 mmcf/d = 30,000 mcf/d and forward gas curve is $16-18/mcf out to 2011.
1,000 barrels of condensate at say $120/barrel for good measure.
Op costs of about $2/boe are fairly accurate.
At $15 gas, the gas generates revenue of $450,000 per day, plus $120,000 per day for the condensate.
That's $570,000 per day... minus $12,000 per day in op costs ($2/boe for 6,000 boe/day).
No royalties, no taxes.
Cash flow is therefore about $558,000 per day which is almost exactly $200 million per year. That's about $1/share in cash flow. The well has been designed and will be produced such that productionwill be flat over the first 3 years, before entering steep decline inyear 4.
They'll take all of that cash and plow it back into drilling and from what I can see, their portfolio exposes me to about 600+ Bcf of targets and a whopper oil target that's going to spud in about 2 weeks.
My point is that I think BUK is silly cheap at current levels, cash flow is king for a junior and BUK will have tonnes of cash and lots of targets to drill.
I've done my DD and am more than happy with this one, but to each his own...