Mart Resources Inc MAUXF

Mart´s fair value

[Fernando2010]

Now that the dividend has been postponed, there is no reason to value Mart out of the metrics prevailing in recent transactions in Nigeria (basically, field divestments by major companies).
Shell has been selling their equity interest in a number of onshore fields for an average value of US$ 5 per barrel of 2P reserves.

The reasons for this low price of Nigerian onshore reseves are well known. In the case of MArt, there is another reason not to overpay for its reserves, and that reason is Mart being subject to double taxation for its operations in Umusadege (Mart is paying income taxes both as a member of the consortium and as a provider of technical services, see Q1 2014 financial statement).
According to last report, MArt has 18 mmboe of 2P reserves
I understand that MArt will have an extra income when the second pipeline is ready but this income will come from the same pool of reserves.
I also now that MArt´s consortium has been selected as the "preferred bidder" for an onshore field but so far we don´t know when and how this new venture will materialized. We don´t know either how Mart is going to finance this new project, how much additional debt and equity will be required to pay for the field, the capex requirements, etc.

So, applying the above mencioned transaction metric to Mart, and taking into account only their current project, we have:

Mart 2P reserves: 18 mmboe
Price per barrel: US$ 5 /boe of 2P reserves

Enterprise value: US$ 90 millons= CAD 82 millons

Working capital at the end of Q1 2014: CAD 16 millons
Long term debt at the end of Q1 2014: CAD 85 millons

Target market cap: CAD 82 millons + WC CAD 16 millons - Debt CAD 85 millons= CAD 13 millons
Shares outstanding: 356 millons
Fair value: CAD 0,036 per share