4 reasonable O&G valuations on WVRThis is not for pumping purposes but to generate discussion. Other early-stage companies are evaluated the same way.
Scenario 1:
- Acquire ~ 14,200 acres of land under initial $3 Million fund raise
- Outstanding shares total 33,200,000 outstanding shares in April
- Add another 6,000,000 shares if warrants fully exercised - ~40,000,000
- Bring a partner in – They pay $500/acre to earn 25%
Adds $7,100,000 cash for WVR
Reservoir – Average vertical well in neighboring field produces 164,000 bbls/well
*Note standard deviation is huge – 343,000bbls!
Net back - $35 to $40/bbl, but 75% wi now, so $25/bbl
$25/bbl x 2 wells/section(164,000) x 22 sections = $180,000,000
Divide that by the outstanding shares and we get $ 4.50/share
Scenario 2:
- Acquire ~ 14,200 acres of land under initial $3 Million fund raise
- Outstanding shares total 33,200,000 outstanding shares in April
- Add another 6,000,000 shares if warrants fully exercised - ~40,000,000
- Bring a partner in – They pay $500/acre to earn 25%
Adds $7,100,000 cash for WVR
Niobrara shale has 15-20 mmbbls/section based on industry data. We can see anywhere from 10 to 15% recovery based on the 2002 study.
15,000,000 x 0.10 = 1,500,000 bbls recoverable/sec.
22 sections x $25/bbl net back x 1,500,000 bbls/sec recoverable = $825,000,000
Now let’s risk it: $825 mill x 0.20 chance of success = $165,000,000
Divide this by the number of outstanding shares = $4.13/share risked at 20%
Scenario 3:
- Acquire ~ 14,200 acres of land under initial $3 Million fund raise
- Outstanding shares total 33,200,000 outstanding shares in April
- Add another 6,000,000 shares if warrants fully exercised - ~40,000,000
- Bring a partner in – They pay $500/acre to earn 25%
Adds $7,100,000 cash for WVR
Same as scenario 2, but without 20% risking = $20.63 / share
Scenario 4: Best case
And finally, if they acquire the 130,000 acres as they plan to in the future, we would be looking at an unrisked share value of around $114/share
Good luck!