RE: CanadaSeven1 your quote on CLL $40K value per day eh?
Iou are confused or did not read what I wrote carefully.
I said “give $40K value for each bb per day production”. Each additional barrel will bring in $40K! for example, if we follow your argument, CLL will produce about 5000 barrels per day, then the value becomes $40K x 5000 = $20M. The rest of your arguments then failed because you did not understand $40K value came from.
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Now, With current oil price at $60,
60 X 360 (days per year) = $21,600 of revenue if CLL produces one barrel of oil per day for 360 days per year.
$40K value (for each barrel of oil production per day) for stock price means that
$40K x 10,000 = $400M value , CLL has 200 M shares outstanding, so that translates into $2 per share value from 10,000 bb per day production in my earlier post, assuming CLL will produce 10,000 barrels per day.
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We can take cash flow approach you mentioned too.
If each barrel, CLL makes $40 profits (is this realistic? You mentioned about $10 per barrel cost, that seems to be too low), we get
$40 X 10,000 X 360 = $ 144M
CLL has 200 M shares outstanding, we get $144M/200M = $0.72.
CLL current price $3.60, (and let us assume 1 C = 1 US for simplicity, about 15% error), we have
Price/earning = 3.6 /0.72 = 5 (based on 10,000 barrels of production per day and $40 profit per barrel and $60 oil price)
However, if CLL makes only $20 per barrel (more reasonable), we have earning per share $0.36, and current Price/earning = 10.
Fully value giving that there are other risks involved with CLL including failure to complete the project on time and oil prices. Furthermore, this is based on future 2007 or 2008 income, not based on 2006 as CLL does not produce 10,000 barrels at this time.
As CLL needs money to develop other Pods, thus the actual earning will be lower than $40 per barrel of oil produced. At the beginning, it could be ZERO (or even could be negative) due to heavy investment to other pods, but in the long run it will be better if CLL uses the oil revenue to develop other pods. This will not dilute any more shares or need CLL to raise debt.
The trick for CLL to concurrently develop other pods using money from pod 1 so that future revenue can significantly increase in a short period of time. Developing one pod at a time will delay the value of CLL.
The proper value of CLL Depending on the multiples people assign to price/earning, price/cash flow or price/revenue.
While I am long (and just added some shares recently), but I doubt that CLL has value of $25. Maybe $10 to $12 by the end of 2007 assuming pod 1 eventually will reach 10,000.