Reconnaissance Energy (Africa) Ltd V.RECO

I saw this on another BB..

[Bpultra]

The question was asked ...

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I am really new but doesn’t a market cap of 1.5bn seem really high? I believe they have something here but I find it hard to believe its worth 1/20 of OXY
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The answer given...


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Well, there's two ways to look at it. They certainly don't have 1/20 the assets of Oxy, or 1/20 the revenue of Oxy or 1/20 the production of Oxy. That's all true.

The other way to look at it is that this is a purely speculative play at this point. You are gambling that a company that has zero production today and zero revenue today is going to discover commercially exploitable oil reserves in a hitherto unexplored basin. And that the potential discovery here will be significant - significant enough to be paying a lot today on a hope tomorrow for a potentially huge pay off.

So it all depends on your personal risk comfort. This is not like buying a staid dividend stock for your retirement. It originally was somewhat akin to buying a lottery ticket for your retirement. But the first two wells have indicated a petroleum system IS present, so now the hunt is on to find actual oil reservoirs that can be exploited. If they find them, the sky's the limit. And some are willing to pay 1/20 the price of Oxy to get in on that.

By the way...Oxy itself started this way. A tiny company with no real history or assets, and then struck it big in Libya by finding oil in areas the major companies had missed. Went from 0 production to 800,000 barrels/day in just four years, including having its own pipelines feeding its own maritime export port.

[Cali61]

I've seen this question before. The answer is dead on. There is no way to "value" a purely speculative play. It's "worth" whatever someone is willing to pay for it knowing the risk/reward and their comfort level.

[teheran10]

"Purely speculative play" ??????????? Kindly re-read all NR from the past. We are not blindly searching for oil, we have a discovery already.  Next week will be Fantastic.  $150-$250 

[Dumpinvestor]

I hope you are right for next week...crush the shorts..I love it

[FastIroc]

Teheran, I like your enthousiasm !! May be it won't be next week, but I expect this month to be good, I hope 20-25$.......

[Cali61]

Don't post words that I didn't even remotely say. That's truly insulting. I did not say we are blindly searching for oil. We have found shows. We have not found (confirmed) recoverable oil yet. We almost for sure will. The key word is almost. Until then it is still speculative. If you don't know the difference, I can't help you with that. The point is, at this time, there is no

[frank7717]

well said. Many people are counting the proverbial chicken before the egg here.