New Vero Valuation Per Share According to my estimate, I would expect that:
1. Assuming the deal closes on January 31, 2012,
2. Management pays off all of the ~$168M in debt,
3. It looks like the Company's share price was beatened down significantly as Vero became very highly levered and it faced what looked like a cash crunch
4. Previous (discounted) market cap of ~$110M (at a depressed $2.24per share due to #3 above) + debt of $168M + Estimated Future Development Potential (at high leverage and low probability of ability to execute resulting in a significant discount) to ~$150M = a total of $428M. Therefore with 49M shares outstanding the previous valuation of the "Old" Vero would be ~$8.73 per share.
After today's annoucement...
1. Amazing New Vero Operating Netbacks of $52.30 /boe - see new Company presentation here:
https://www.veroenergy.ca/Docs/New-Preso-Final-Jan-2-Presentation.pdf
2. Now ~67% of revenues are oil-based (less Natural gas, this is huge positive)
3. Announced that it plans to pay out ~0.30 per share after the shareholdre vote near the end of Februray 2012
4. New Vero Valuation should benefit from new estimated Future Development Potential + higher expected growth rate (200% to 380%) + no debt + liquidity to drill = $310M. Therefore with 49M shares outstanding the valuation of the New Vero should be ~$6.23 per share.
The big question remains, can management deliver these results with a fresh new start?
Any thoughts on this?
DD