GOLONG thinks out loud...
OpenRange Energy andBirchcliff Energy – A Comparison
Stop me if you think I’m nuts here. .
ONR appears to be in a place where Birchcliff (BIR) was in2005. Similar business models, similar Nat Gas / Oil, same range of BOE per day(6,000). Back in mid 2005, BIR , with their plays near GrandPrairie and the Peace River,traded on the TSX @ $4.50. Today, BIR2011 exit is about 18,000 boe. Stock trades at $14. Divisible multiple forcomparison sake, ($14 divided by 18k boe per day =.0007)
ONR, in the Ansell / Sundance region, with 90% Nat gas and10 % oil, trades at $1.92 . With 6,000 boe current, use the .0007multiplier…ONR comes out at $4.20 . Analysts are saying ONR $3-4. This issimple math.
BIR guidance for 2012 is 28,000 boe, a 55% gain from 2011.Using the same multiple, all things being equal at this point in time, BIRshares can move up to $19.60 . Analysts are saying $20+. BIR says they are upfor sale if the right number comes in. Anything in the $20 range and they willget swallowed up, imo.
ONR, going from 6,000 boe to 10,000 boe, a gain of 60% (2012guidance), using the same calculation puts ONR shares at $7.00 for 2012.
Same type of company. Same type of business. Same type ofguidance.
ONR is UNDERVALUED by the Street. BTW, the STREET usuallywakes up and catches on late.
Appreciate all thoughts . . .Best GOLONG