What is Ithaca Really Worth?Points:
1. Most analysts are now of the view that oil demand will match and then exceed supply by the end of this year. Such is the nature of recency bias that the same analysts translate this into $70 oil, but this is clearly nonsense, a supply shortage will mean $100 oil and rising.
2. The Stella output estimates are far too conservative given the flow test results. I can understand Ithaca's caution and the fact that they won't pump to the max but still ......
3. The earnings potential for Stella/Ithaca from 2017 and beyond have got to be the main driver for setting the selling price. Many if not most institutional holders will still have under water positions and they will understand very well what the forward earnings of Ithaca are likley to be.
4. Given these points and Ithaca's recent issue with shareholder angst I think that it will be very difficult for Ithaca to recommend a bid to shareholders below $3 and given the likely forward earnings of Ithaca, $3 is still something of a steal.
Doug