RE:Back of the envelopeI'd use a slightly more aggressive discounted cash flow approach and rate of 15%. The lower rate is justified by the greater certainty introduced by hedging, positive oil price direction, and the fact that the reserve field is proven. This yields a PPS of $3.50
Ithaca has exceeded my execution expectations, and my prior papaer napkin figure was also around $2.50. But the markets continue to underestimate Itahca's value (and value preserved) by hedging + tax loss carryforwards + good management and BOD profile + profile as a serous CASH GENERATOR. In this environment, cash is king.
Cale