Desert Mountain Energy Corp V.DME

Long Term Price Target | 50 to 55 Production Wells

[FilProTrading]

Hello, this is my first time posting on Stockhouse and am hoping to get some feedback and thoughts on the long term Price Target for DME.
 
For this long term Price Target I’m looking at where they will be after the completion of 50 to 55 wells understanding the company seems to be framing this as taking 6 years and $45M CAPEX. The simple math I’ve done from the company’s presentation (I am assuming their amounts are in USD) is as follows:
 
CAPEX for six (6) wells: $33,000,000
CAPEX Payback from production of six (6) wells: 18 months
 
Annual Gross Revenue per well $275mcf: $8,942,000
Annual Gross Revenue from six (6) wells @ $275mcf: $50,952,000
18-months Gross Revenue from six (6) wells: $76,428,000
 
Assuming all Net Income after tax, G&A and royalties is being applied as Payback to $33,000,000 CAPEX on six (6) wells, it looks like the Annual Net Income per well at $275mcf is estimated at  $3,861,155 (i.e. *33,000,000/$76,428,000 = 43.18% |$8,942,000*0.4318 = $3,861,155).
 
if the projected number of production wells is 50 to 55 is reached, and my math is correct, then the long-term Annual Net Income of the company after operating costs, tax, G&A and royalties could be between ~$193,057,780 to $212,363,558 (at a helium price of $275mcf).
 
Assuming the outstanding shares do not exceed 78,500,378, this gives an EPS range of $2.46 to $2.70. Using a P/E ratio of 15 (best I could discern from looking at various O&G PE ratio averages, but understand that value of a Helium producer may not correlate well to those commodities), that gives a long-term Price Target of $37 to $40.
 
Appreciate any and all feedback and corrections in my math and assumptions. Thanks!!

[Bertie20]

Looks plausible to me! The major uncertainty as far as I can tell (excluding this infuriating Flagstaff situation) is the number of shares--they raised a very large sum a few months ago but they still need probably over $20m to get to first production. They might choose a loan of course, but it's possible that they will issue more shares to pay at least some of the capital costs

[fredo1]

Very well done. We do not know well productivity. One well on the Kerr McGee project accounted for a disproportionate share of the life of field production so per well economics might cover a very wide range.Otherwise, your numbers look spot on to me.

[FilProTrading]

Thank you both for taking the time to read my post and provide feedback. It is definitely very frustrating to see the City of Flagstaff’s ill-informed legal and PR position. Hopefully, this will be addressed quickly and favorably for DME and the results from the third well can be presented without this issue lingering.   I appreciate the insight into the estimated additional CAPEX required to

[Bertie20]

NASDAQ is a fair way off in my view. Irwin Olian also has a history of selling his companies, and, given his age, thst was my assumption. The new CEO is another story, and I'm not sure what drives him. He's not a young bloke but he's working every hour available so I'm not sure what is goal is. 

[FilProTrading]

Thank you. I'll be sure to keep an eye out for any more interviews or company statements with the new CEO to get some understanding of his vision on how best to move the company forward if they meet their goals with bringing the initial six production wells oniline. It will also be interesting to see what DME does with the KGSU oil property. With the weakening USD and energy demand eventually