Lightstream Resources Ltd. LSTMF

RE:If It's Cheap_How Does LTS Become "Uncheap"_When?_How?

[tcelling]

Based on similar sales over the past few years (not just the most recent), the producing assets alone are worth at least $10/share, after debt. If you add in non-producing land, $12/share would be fair. I don't put much thought into today's oil price. This is a blip in the road and if you invest in oil you have to expect this kind of volatility. Fact is, the world economy is improving and the cost of new oil production is in the $100+ range for any decent return.

I think the way LTS will realize this kind of value is sentiment dependent. Unfortunately, nobody seems to care about value in this environment. We have analysts with $6 price targets, which is >50% return from today's price, and yet they have 'reduce' ratings on the stock. It makes no sense what-so-ever. It is likely to take a return of $100 oil and possibly more land sales to turn around the market's perception.

At today's pricing and $50 netback, assuming 36000boe/d and using a 20% decline rate, LTS could stop drilling today and sit on their hands to produce enough cash from current wells over 10 years to pay off all debt and earn $6.5/share in profit while continuing to earn on the producing wells (i.e. there would still be a lot of value remaining). This ignores all land and is likely using a higher decline rate than is realistic over 10 years of mature wells. $50 netback is also likely a low average over 10 years.