Reposting this ...
Formula to estimate NAV for VST:
Oil in groung estimate X Recovery Factor X 37% = VST's share of Recovered oil
Buthow much is that worth? Well, according to Scotia, 148MM barrels isworth 15.96 a share to NIKO. Since Niko has 50 Million shares, thatmeans that 148MM Barrels is worth $798,000,000.00. (148,000,000 X 15.96= 798,000,000.00)
That actually comes out to $5.39 per barrel. (798,000,000 / 148,000,000 = 5.39)
Anyways,lets do the math for now much 148MM Barrels is worth to VST. It's verysimple, just divide 798,000,000 by 270,000,000 ... and you get $2.95per share for 148MM barrels of recovered oil. To make things simple,lets just calculate how much per share we are worth per 100MM barrels -100/148 x 2.95 = $1.99 per 100MM barrels of oil.
Of course thebig question is how much oil is down there and what's the recoveryrate. This is where you get to plug in the numbers with the formulaabove ...
As an example, if oil in ground is 2.5 billion barrelsand the recovery rate is 50% and our share is 37% (2,500,000,000 x .5 x.37) then our NET share of this oil is 462,500,000 barrels. Asestablished earlier, every 100MM barrels is worth $1.99 per share tovast, so just multiply 1.99 x 4.625 and VST NAV should be $9.20 pershare. So it looks like we will need about 2.7 BILLION barrels ofrecovered oil for Vasts share price to go to $20. (2,700,000,000 X .37= 999,000,000 barrels for VST . $1.99 X 9.99 = $19.88)
That'sdo-able if we hit 4.5 Billion barrels with a 60% recovery rate... and a60% recovery rate is just about what Heritage is looking at for Miran:
- Miran West structure estimated oil-in-place of between 2.3 to 4.2 billion barrels
- Recovery factor expected to be between 50% to 70% due to the highly fractured nature of the reservoirs
The published estimated recovery rate for VST is 16.5%. This IMO is ridiculously low.
There is a poster here (the doctor of Doom and Gloom ... the master of disaster ... goop40) who will try to persuade you that this stock is worth 17cents per share. Technically he is right but this is a VENTURE stock (speculative) and has the possibility to go much higher. They are drilling in KURDISTAN ... not Oregon! There's TONS of oil in Kurdistan ... billions and BILLIONS of barrels.