LGX Oil + Gas Inc ROAOF

RE: Brenda value, crude@$60, 40mm barrels

[KeithR39]

Hi Barsax, Effectively, I use a model as simple as possible. It is an excel sheet using the parameters stated at the head of the doc. We cant get out of a basic reality: Revenu - Cost = Profit. SO, I report the starting cost (130mm USD) on a "per barrel" basis. Then I add a day to day operating cost per barrel. This gives the amortised cost/barrel. Then applies the tax effect. I go with veselino for the NPV. The purpose of it is to adjust the futur dollars with todays values taking in account inflation. You can use 2.5% if you want (not 15%) and you have to note that the majority of the revenu comes from the first 2 years. So, the effect of inflation is a lot lowered. I do not complicate the math with that adjustement (rule: keep it simple when possible!) because other variables here are of much greater importance, like crude oil price. FURTHERMORE The fact that the investor has the OPTION to invest in the US bonds instead of the Oilexco shares DOES NOT take any REAL money from the REAL cashflow! If you deduce the HYPOTHETICAL rate of the US bonds, then you would like to find the ADDED VALUE of the Oilexco shares COPMPARED with the US bonds. My concern is to find HOW MUCH REAL MONEY WILL BE LEFT OUT TO SHAREHOLDERS FROM BRENDA. All imho. Feedbacks appreciated.