RE: So and equivalent target for PXMUnfortunately, I am unable to answer that question, I don't know the assumptions Mackie used in their recommendation. Bridge (BUK) has other assets and I know very little about them to know what is in play, what they are divesting, how much capital would come from those assets, etc. What little we do have to go on comes from the report from Rose filed by PXM indicating that they have 10 potential development project, each with 10 production wells, each potentially in excess of 100 Million dollars, which is 50% to PXM. This is a big statement but that is 500 Million dollars. The next to take into consideration is the time involved in developing any of these development fields. We are just starting, they have raised money at 50 cents, and time is passing. What we do know is from their Press Release.
AJM calculated the proved and probable reserves in regard to the successful wells that were recently drilled in early 2010. The proven and probable reserves totalled 322,400 barrels of oil equivalent with a net present value of 7.4-million discounted at 10 per cent before tax. The successful wells cost the company -- when including drilling, casing and testing -- approximately 1.79-million. This resulted in proved plus probable net present value before tax, discounted at 10 per cent, of more than 7.4-million net to Paramax.
My assumption here is that this is for only the wells in the ground (drilled as someone else said), thus 9 more production wells in each (which they have started) can be drilled in these two structures alone. Let's just say that Paramax nets out 18 times 7.4 or about divided by half = 66 million net to PXM. You can now see that if we add to this more successful production developments, which by the Mackie report is sounds like, everything begins to grow. If PXM was to be acquired, a multiple of net reserves is paid now for the future (perhaps 3x, or 5x or more - not quite sure).
And all of this doesn't include the new 2D seismic, new discoveries, oil, better recover, horizontal drilling, new technologies, etc.
Bottom line, the people that paid fifty cents in the private placement are privy to what should be worth more than that otherwise why would they put money in. Thus, the current price is sounding cheap to me. Add a couple of high pressure wells and hype in the market, heck it is even sounding cheaper.
One other thing, I read somewhere that they might be building a natural gas power plant in Idaho which might even bring a premium to PXM and BUK since they have most of this locked up.
Anyone add, change or delete to this discussion.