Calculating stock priceUsing the AMEX Oil Index and other indexes, the PE ratio for producing oil companies = 11X to 20X. A newly producing oil company may have a PE of only 10X, while investors try to determine how much oil the company has. The greater the amount of oil, the higher the ultimate PE. A PE ratio of 10 means that a stock will have a price of $10 for each $1 annual profits, or a stock price of $1 for each $.10 of annual profits.
Some estimates put the amount of oil that we have at 1 billion barrels. Could be less than that. Say that we have 100 million barrels of easily obtainable oil. That would mean that our PE ratio should easily end up at a PE of 10X or even higher. The price of oil has been up and down around the $100 per barrel area. Simba has 140 million shares. To earn .10/share we would have to produce 140,000 barrels a year. Sounds like a lot, but we have a very large land position which eventually could host a lot of wells. And even at a production rate of 140,000 barrels a year, the field would be producing oil for over 700 years. No way. Most likely we would end up producing more than that, which would also increase our PE ratio, possibly up to a PE ratio of 15. The higher production along with a higher PE ratio will mean a stock price worth several dollars a share.
Plus by that time our other properties will be in production, so we may end up with a stock price of $5 or even higher. (Remember, if we earn just $1 a share in A YEARS WORTH OF EARNINGS, it would give us a stock price of $10 to $15 a share.) Just an estimate, but over time, our present price is going to look dirt cheap. And it may not take that long. Once we get our PSA(s) and start our 2D seismic evaluation, our price will start climbing. Then, when we start our first test well, it will climb again. Then, depending on how much oil the well produces, (the odds are that it won't be a dry well because the oil seeps show that there is oil present underground and the 2D will show the best places to drill.) our price will start going up again. And remember, the oil output on a virgin monster deposit can be phenominal. The well could produce 100's of barrels of oil A DAY, or more. And when we start drilling more wells, our stock price will climb even higher. This could be fun.
Turn on your computers' sound and go to www.youtube.com/watch?v=EmfE4KAZicY