RE: RE: RE: Time to Buy? Hardly.Conservative? Best Case (ie 10% confidence level) for resources, is only 34 Bcf.
From the MD&A:
"An independent qualified resource evaluator, AJM Petroleum Consultants, provided the Company with an evaluation of contingent resources and reserves in the Western Idaho Basin, effective May 31, 2010, in compliance with National Instrument 51-101 entitled "Standards of Disclosure for Oil and Gas Activities as adopted by the Canadian Securities Regulators." The Company’s holdings have been assigned a Best Case resources estimate of 34 Bcf net. The Proved and Probable Reserves (2P) total 3.8 Bcf gross and 1.9 Bcf net for the wells tested. These reserve estimates are based solely on the individual well assumed spacing areas. The net present value for the Proved and Probable Reserves, before tax discounted at 10%, was $7.1 million for Bridge’s 50% interest."
"Best case" (P10) is only 10% confidence level. They didn't publish what P50 or P90 is (and I can't find the report anywhere on SEDAR to check). P50 (likely case) will obviously be much lower.
To calc value for BUK, let's be VERY VERY generous after the recent duster and assume BUK converts 50% of the 34 Bcf "best case" resource into 2P reserves. To get value of that 17MM Bcf, we have to back into the numbers. We are given before tax value of $7.1MM for 1.9Bcf = $3.75MM per Bcf. Assume 33% tax rate and that's $2.5MM per Bcf after tax. With 17 Bcf, that's reserve value of $43MM after tax 2P NVP10.
As a generous WAG, I suggest BUK will be stuck with $10MM debt after Durango is sold. (Durango's 2P NPV10 after tax is only $58MM but that isn't what the field will sell for with water problems and being shut in - $50MM sales price would be a great outcome imo).
Deducting debt, that leaves $33MM "value" in BUK.
Currently have 161MM os ~
.205 = $33MM market cap. In other words, just to justify current "low" share price, the market is already pricing in most likely success case.
But then one needs to consider that BUK needs to raise cash to fund capex/G&A etc. Say another $10MM to allow them to muddle along and "perhaps" get to self funding IF they are very, very lucky (ie US gas prices rise and they don't have any more dusters). To be generous, let's assume they can raise $10MM @ 0.20 without any warrants (unlikely as heck, but hey, let's give em every benefit). Add in another 12% dilution and there is still more downside to come from current prices.
BUK is a "eh" buy at perhaps
.10.