Post by
AUborealis on Apr 16, 2021 7:21pm
To value ROE and RECO
use a factor of ~ 7 when comparing Mkt Caps. (6-8)
The entire lands under RECO's umbrella is about 8.5MM acres.
6.3 is in Namibia...but the Namibian govt. has a 10% carried interest.
That leaves 5.7MM to RECO.
There is 2.22MM acres in Botswana 100% RECO.
ROE can option 50% or 1.11MM acres
Leaving RECO a total of 5.7MM (Namibia) + 1.11MM (Botswana) = 7.81MM acres
A 7.8:1 ratio.... RECO:ROE
However the Botswana acreage (ROE/RECO - 50/50) looks to be the deepest part of the basin, and therefore more valuable.
This could eventually see ROE trade closer to 6:1 Ratio.
So using a 'thumb' assessment ROE Mkt Cap could eventually equal 1/6th the Mkt Cap of RECO...or lag out to 1/8th the value of RECO until more is known.
Today the MKT CAP of RECO closed at $1.08 Biliion.
1/8th would value ROE at $135MM.
1/6th would value ROE at $180MM
It closed today with a Mkt Cap of $1.224MM
So about 10% to 50% UNDER valued depending on where on the Ratio scale you want to be.
Bonus Potentail: ROE has legacy potential in Mexico if Mexico ever get's it's act together.
Comment by
Redrum180 on Apr 16, 2021 8:19pm
It also gives ROE a place to go if its rigs leave Mexico. There are, I assume, a lot of drilling rigs lying dormant in Mexico that can quickly be mobilized for the Kavango Basin (in my not so expert opinion).
Comment by
Ebenizer3 on Apr 16, 2021 9:58pm
nice work up, somewhere I read something about the botswana gov. looking into a way to invest in reco/roe. Seems only fair if they want to become W.I. partner. Things are heating up and everyone wants a piece. It's up to reco/roe to execute.
Comment by
leblereau on Apr 17, 2021 10:44am
Regarding one of your calculations:- Leaving RECO a total of 5.7MM (Namibia) + 1.11MM (Botswana) = 7.81MM acres Doesn't 5.7MM + 1.11MM = 6.81MM acres? Correct me if I'm wrong.
Comment by
teheran10 on Apr 17, 2021 12:58pm
Uneducated question: how much if the land does ROE own in both countries.
Comment by
Ebenizer3 on Apr 18, 2021 10:50am
again can't underscore the opportunity to invest in 1.1 mil acres for measly .34 cents in possibly the deepest part of the basin. Even if it takes a couple of years to get to the drilling stage the success in Namibia will propel roe higher. Everything they learn in namibia will benefit Botswana. Good day