ValuationThe current valuation makes no sense. I don't think a lot of investors understand this play. I don't agree that P2 reserves are only worth $3-$4.00 a barrel. They are $7-$10. We just saw a take out on this valuation.
This price gives absolutley no value to TPL's resources. It assumes really that they are not going to find any more oil. It is difficult to comprehend that after findign another zone, even if the flow rate is not that significant that the SP continues to tumble. The flow is on a relatively small choke. Given this finding, you would assume that the sentiment would turn positive to the further AKD03 testing.
None of the 4 reporting analysts have downgraded their targets.
The reported P1 and P2 reserves in the annual report were disappointing. However, this is what Foucaud of First Energy said on March 31, 2011 - before the AKD03 discovery.
" The 2P figure is below the previous engineer's report thast indicated that AKD01 had come into contact with 30 mmbbl of volume. We ayttribute the difference between the 2p figure and the 30 mmbbl to a technical accounting issue. McDaniel used a standardised approach under NI 51-01 where a small mapped area is drawn the well bore and only that volume is included"
"Our Risked NAV of $2.73 per share is intact. We maintain our speculative buy recommendation and our target prce of $2.70. The results of AKD04 and 05 are expected late Q2 2011 which could allow the firm to triple its 2P oil reserves."