OTCPK:VGIPF - Post by User
Comment by
Tradewhoreon Oct 29, 2012 7:53pm
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Post# 20537284
RE: RE: Stock goes to $3
RE: RE: Stock goes to $3 You need to look at Enterprise value, not market cap. EV of RPL was $300M and they had 3,700 bbl/d of production. They paid $405M for yes, the same production, but the key is the low risk nature of the assets acquired. 81% of the reserves are proven producing, meaning the capital has been spent, so RPL can sit back and collect the high netback cash flow. These are repeatable, low risk development assets that they acquired and they will have cost savings through an increase in scale (operational synergies referenced in PR). Need to look at this income vehicle relative to other income paying equities. This is very very attractive at 10% yield and the stock will be bought until we land somewhere between 6 and 7% yield. The stock price needs to go to $3.50 for us to get to a 6.5% yield. I am not saying we go to $3.50 tomorrow but between now and closing, it wouldn't surprise me. I hope this helps.