Realistic ExpectationsI am pretty excited about POE's upcoming summer drilling in Thailand, but especially Indonesia.
Last time they were drilling Indonesia, I bought early and sold on spud. I was planning to do the same this year, but the Thailand success has changed my mind.
My opinion is that Thailand will throw off between $20 and $30 MM in cashflow (between 1600 bopd and 2400 bopd) depending on the sucess of the drilling program. That should support a $2 per share price.
If Indonesia hits, with 1000 bopd plus test, I would value the oil at ~$0.50 per bbl of contingent resource. Guys like Chen call that $10/bbl, but that ignores the fact that it is production sharing contract, a ton of capital will have to be spent, the time value of money and the uncertainty in the contingent resource. This would equate to another $2/share.
The thing is, stocks like this are very emotional, so a hit in Indonesia could send the stock much higher than the $4/share and a miss in Indonesia could send the stock much lower than the $2/share for Thailand.
My strategy this year will depend on the Indonesian results. I am going hold through the drilling and sell on successful testing and buy more if it tanks to $1.50 or less on a dud in Indonesia..