VALUE OF LFD, WORTH REPEATING...I have reposted for benefit of others on valuation of LFD I previously posted on this message board. I apologize to those whom may have already read this post. I would like everyone to benefit from this analysis so that they can make their own well informed decisions.
Good Luck,
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Today on November 19, 2010 we closed at 30 cents on strong volume of about 1.2 million shares.
In terms of chart formation, we are in the process of forming the second step of a long term rally that will bring us to fair value of LFD. We broke the previous high of about 29 cents. I expect us to continue on this second leg to 35 cents.
To build a ladder may requires 10 to 15 steps. If you want a sample of how the chart will look, take a peek at Ramarco which went from 25 cents to $ 2.78 on a steady rise, a 1000% return.
The internal reports of LFD state that they have 3.1 billion barrels of oil in place. The new report to be issued either shortly before Christmas or early 2011 will confirm that this oil in place plus more is my expectation.
The first hole is not a discovery oil. It is an exploration well with 5,000 barrels of oil per day that will generat $ 60 million in revenue to LFD. This is material. For those whom missed my earlier analysis, I have reproduced it below. This was called Valuation and is a few days old. Enjoy.
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To calculate a valuation on LFD with the information we know we need hard numbers.
We know that in less than 6 months LFD will spud its first drill hole where past history confirms the production of 4,800 barrels of oil per day. We also know that per past 43-101 reports that the land in which LFD is drilling may hold up to 3.3 billion barrels of oil. A new estimate will be produced in January 2011, is my guess.
Now to a calculation of its valuation.
LFD has a market cap of $ 38 million at 26 cents.
The first drill hole has been confirmed that it will be put into production quickly.
So, 4,800 barrels of oil * $ 80 per barrel * 365 days * 40% share rate for LFD gives $ 56 million in revenue.
Stocks usually trade anywhere from 3 times to 6 times sales.
This would infer a stock price based on the first hole alone of 78 cents to $ 1.56 per share.
It is important to note that this estimate of a stock price is based on the production of only 1 hole. LFD has 7 confirmed drill holes that have oil.
Anyone buying at 26 cents is really stealing shares at basement bargain prices.
Soros is a trader. He invested close to $ 6 million at 30 cents and has options for another $ 6 million at 65 cents by September 2011. Investors also invested in similar pattern.
This tells you that anything less than 65 cents is really a BUY or bargain.
You have two choices. You either load up now before others wake up. Or, you look at the train leave and buy it in 6 months at $ 1.56 per share.
I know some of you are comparing this to VST. This is a mistake as VST is a wildcat operation. A failure of VST would be very bullish to LFD since management would focus entirely on LFD. VST has only 17% chance of hitting oil per their figures while LFD is 100% certain.
JMHO