RE: BUK Target Price?...Good analysis Spakletooth... I'm not overly concerned about the stock coming free trading in April, those that bough the deal will have a hard time bringing themselves to flagrantly blow stock out the door at any price with the Durango development well drilled and tested by then. Expect a test rate well north of 30 mmcf/d when they drill it.
Further to your cash flow comment... note that the "taxes" part of the bar graph is actually free cash flow. Since Bridge will be plowing all of their revenue back into the ground on exploration (not to mention the Durango development costs) the tax credits will ensure that they never pay tax on Durango production. A bit like Oilexco that way. Oilexco has yet to pay any taxes in the North Sea and likely won't until at least 2010.
So, Durango should provide north of $200 million in free cash flow over the 3.5 year life of Durango... not a bad booster rocket for a junior getting started out and almost an unheard of short timeline to production given the simple tie-back to the Waveney platform.
And North Piper is special, make no mistake. For perspective, it could twice the size of Oilexco's Huntington and Bridge has 100% of it (though I think they'll farm part of it out during drilling). The target appears to be a very valid strat play and simply has to be drilled. Not many targets of that size out there you know. It will get attention.
Also, don't discount the management factor. The Conoco experience is key and is likely why they've been able to assemble a "real" portfolio that blows away anything that IFR or GUL has ever had. Keep in mind that BUK are prospect generators and do not follow the "farm-in" model of GUL and IFR who both have limited North Sea experience if memory serves.
The Tyne and Trent prospects are nothing to sneeze at either... and Aspen looks like a low risk way to drill a Durango look-alike while testing the Carboniferous play out there at the same time.
I think $1 is going to look like pretty darn cheap sooner than later... Bridge is virtually unknown right now, but the Durango well tests (assuming the well is successful of course) will get people asking "Bridge who?".
I remember Oilexco at $1.20... a dinky little company re-drilling a fallow past discovery. I'm not saying we can duplicate Oilexco's success, but having an aggressive company with cash flow and solid prospects is a good place to start IMO.
North Piper is arguably the best "free option" in the market to have and I think the cash flow from Durango will result in a good backstop on the share price at higher levels than today. Speculation above that base level (which I think will be in the $1.50-$2.00 range) will almost certainly occur as word gets out about the size of the North Piper prize.
Good luck to the longs.