How about thisWhile you will find it hard to believe. Oil will be $200/bbl within 2 years. This is true. So while we sit here and try to figure out whether BNK can make money at $60/bbl or $50/bbl - we should really be focussed on what is this company worth when oil goes to $200/bbl and can they survive a potentially horrific econmic downturn in the next 24 months.
They can survive if they are prudent. The reserves they have are worth alot. The political factor is the only risk i see.
But, assuming they do survive. They will be capable of providing 30-50,000 bpd at profit of likley $100+per barrel in 3 years. Thats over $1B per year profit on the low end. Now the stampede will start right away with posters saying this is preposterous.
Consider this:
Global Oil Production Is Falling Faster Than Expected, FT Says
By Angela Macdonald-Smith
Oct. 29 (Bloomberg) -- Global crude-oil output is falling faster than expected, leaving producers struggling to meet demand without extra investment, the Financial Times said, citing a draft of an International Energy Agency report.
Annual production is set to drop by 9.1 percent in the absence of additional investment, according to the draft of the agency's World Energy Outlook obtained by the newspaper, the FT reported. Even with investment, output will slide by 6.4 percent a year, it said.
The shortfall will become more acute as prices fall and investment decisions are delayed, the newspaper said. The IEA forecasts that the rising consumption of China, India and other developing nations requires investments of $360 billion a year until 2030, it said.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
If you thought Big Oil was big today with there measly $10B per quarter profits - imagine what it will be like when the profits are 3 times that. Big Oil - will turn into Big Energy, likely Nuclear with some other more green options to augment. these companies will dominate the earth and they will be looking for acquisitions in the medium term (2-5 years) to tide them over untilthe next gen of energy is on-line (10-20 years). BNK will be ripe.
I have no problem admitting that I now have 5 times as many shares of BNK as I did 2 months ago (and I had a fair amount 2 months ago) . My average cost is still higher than today's close at $1.2. However - I can imagine 4 years from now sitting back and finding it hard to believe that my fortitude in the fall of 2008 made my whole family wealthy. I will not sell a share of this stock until they are bought out or they are $25 or higher.
Keep the faith folks - Today's oil is yesterday's gold.