RE:Key Sentence to the news release!! :-)They produce only 7.5 barrels per well on average. Hope their reserves are good. We don't know the details of the MOU. If Jem can boost the production of half the wells by 50%, and they get 80% of additional volume, I reckon that pretty much exactly justifies the current share price. If you add in the "large book of reserves", it is of course gravy. Then hopefully there are more deals coming.
What the real significance of this announcement is that they are for real. It is a huge confidence builder. It is not easy for any business to get a large contract let alone in this environment being a small player among a mass of big players. Here is my calculation FWIW. 'Scus the rounding. Comments??
| # Wells | 100 |
| Avg bbls/well/day | |
| bbls total | 300 |
| % Jem's | 80% |
| Jem bbls/day | 240 |
| | |
| days/yr | 365 |
| bbl/yr | 87,600 |
| $/bbl | $ 60 |
| CF/yr | $ 5,256,000 |
| | |
| No shares | 96,000,000 |
| CF/shr | $ 0.05 |
| | |
| Multiple | 5 |
| Theoretical SP | $ 0.27 |
| | |
| Market Cap | $ 26,280,000 |