TriOil Resources Ltd TRIAF

RE: RE: RE: Thoughts

[AIGswap]

I disagree.  The drop isn't due to unexpected declines.  Everyone knows that Cardium wells have hyperbolic decline rates.  So far, the 7 wells with production data compare favourably with the Garrington type curve.  For the Lochend curve, I have average production rates of 220, 140 and 100 boe/d which is comparable to the Garrington curve of 175, 130 and 105.  Also note that in the Lochend average is PBN's 14-28 well which flowed at a restricted rate.

The price drop is just the hot money leaving. I believe the speculators who piled into the stock the last month were expecting gangbusters IP numbers like the TVE or NAE results.  Most likely this hot money went on to more speculative plays like the Alberta Bakken.

I believe that TOL is worth $7 - $9 per share.  If you look at their Tableland partner Nuloch, it is currently trading at $200,000 / boe/d with an enterprise value of $230mm.  TOL has WI of 30% - 50% in Nuloch's good assets, so the market is saying that TOL's Tableland asset is worth roughly $90mm.  With TOLs current enterprise value of $112mm, this leaves about $20mm in value for the Lochend, Sweeney and Pouce Coupe assets.  I believe that the Sweeney and Pouce Coupe assets are worth $20mm on their own.  At $4.25 per share, the market is ascribing ZERO value for TOL's Lochend asset, which is insane given that TVE has 20% of the Cardium acreage yet trades at 64% if the value. 

Bottom line is that TOL trades at $75,000 / boe/d while its direct comps trade north of $130,000 - $200,000 / boe/d (Nuloch, Tamarack Valley, Midway).  A rerating could bring TOL north of $8.  I believe this will happen once the street gets its head around the play.