TSXV:WEE.H - Post by User
Post by
mrtnreaon Aug 06, 2011 5:39pm
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Post# 18912443
2boat question for you
2boat question for youall these numbers seem a little conservative for the following reason:
1 - Very little expansion is factored in there. Many companies now have multi year data. The southern client has already expanded but not a full field yet. Some of these companies with longer data sets should be doubling tools as Davidson suggested which would drastically raise revenue.
2 - Pricing power. At this point revenue is creeping up as many of the tools were free, or discounted and most to the lead client so they are getting a great price on their first expansion no doubt. Going forward, as Davidson has said, those discounts are being removed and $/tool (Pricing Power) will improve. For all we know, Q4 could be drastically higher in revenue because a lot of tools have been put in over the last 6 months and Q3 might have had a lot of front end discounts that we won't see in Q4. Optimistic of course.
3 - Tools in the ground for over a year will no longer have related expense as that is ammortized over 1 year. While all new tools and big expansions will require capital, those first sets of tools will be a profit machine at that point. Perhaps that is a reason the PP holders got their warrents extended. Wee does need that money. Pemex and the pulled tool caused a 1 year delay in the whole affair, but something they may have seen suggested that before April of 2012 WEE will need that money to build tools for their mentioned global expansion. Why waist time extending warrents if their initial vision is not still intact? For the warrents to be exercised above $3.00 something big will have to be announced before April.Time will tell.
So, despite my optimism, if your conservative numbers are all we can expect ... and the warrents don't get exercised, can someone suggest a reasonable SP for a company who is only cash flow positive by Q3 2012?