TriOil Resources Ltd TRIAF

$1.1mm for a section at Lochend

[AIGswap]

Nov 2 Alberta land sale results are out and there was a $1.1mm bid for 1 section at Cochrane (5-03-026), which is the same township where some of TOL's recent successful wells have been.  My guess is that this was NAL buying (it was under broker name).  You can see it for yourself here: https://www.energy.alberta.ca/Tenure/1314.asp

TOL has 57 net sections at Lochend, implying $62.7mm for Lochend land only, or $2.00 per share (valued at $1.1mm per section)ignoring current production and reserves.  I estimate current Lochendproduction to be worth ~$30mm+ of an additional $1.00 per share.

 

This is ignoring their other valuable assets: Tableland and PRA are worth $60mm-$90mm, adding another $2.00 - $3.00 per share.

 

This is also ignoring their huge new light oil discovery, which could be significant.

 

Addthis all up and you quickly get a sum-of-parts NAV for TOL of $5.00 -$6.00 per share.  Note that shares are trading sub $2.00.  Not sure howlong this anomaly can last.  I just can't believe some would sell their shares at this level. 

Anyone have a guess at where this new light oil play is?  Cheers,

[aagold]

AIGSwap,If you really think TOL was worth $5.00-$6.00 per share before the recent dilution, what do you have to say about them selling about 28% of the company for $2.10 per share?  Here's how I calculated that: 31.3M shares before the new issuance / 43.2M after new shares issued = 72%.  Can this transaction in any way, shape, or form be described as *accretive* to existing

[coquitlam]

the pp underwriters are the same group as last pp at $5++ so I'm speculating they wanted to reduce their average price down as favor

[AIGswap]

Capital raises are to be expected in the junior E&P space, so while I am disappointed with the dilution, I would be more disappointed if they maxed out their credit line and then did an equity deal at highly distressed prices (I see it all the time in the sector).  I appreciate that they keep the balance sheet strong and it seems like they want to keep adequate liquidity which

[aagold]

Ok... that was a very generic and non-quantitative answer.  Can you be more quantitative?  I'm asking you specifically because you seem to be quite knowledgeable in this space.1) Would you agree that when a company has positive cashflow from operations (which is the case for TOL) then there is nothing *forcing* them to raise capital?  If the stock

[aagold]

Actually I made an error - the NPV of the $25M invested in new production has to be greater than $48M/0.72 = $67M, since the original shareholders only own 72% of that new production.  So can $25M really be invested to generate production with an NPV of $67M?  Seems doubtful to me, but I can't say for sure.- aagold 

[AIGswap]

E&P's are not self-sustaining until they reach >10,000 boe/d.  Al juniors spend a mutiple of their operating cash flow to develop their assets and grow production.  So all juniors need to do financings quite often, and unfortunately sometimes equity markets are bad when you need money.  Like I said before I believed the intrinsic value of TOL was $5.00-$6.00, now its less

[aagold]

Ok, well that's an interesting point.  Could you elaborate on that 10,000 boe/d number a bit more?  Why is that the magic number?  I'm assuming the issue is that to be self-sustaining, they must invest enough capital each year to generate new production that at least compensates for the natural decline in existing production.  So the existing level of production must