Tomco Energy Share Discussion Threads

[yarisverso] 28/2/2012 21:43:36

There is no sting. He is one of the tozzers. As is Harrissen, R 2 D 2, FuManChuChu, Sir Rational. This is the derampers BB. try this:-



Email update from a hedge fund analyst on Wall Street (many of you will be aware of from previous)

The following is a summary of my updated valuation exercise for TomCo Energy. The contents of this email are entirely my own thinking and express only my own opinions.

Spot WTI crude ended the day. February 23rd, at $107 per barrel. Plugging that price into my DCF model spits out a valuation of 23p per share. I think it's important to recognize how much the valuation of TomCo moves with these higher oil prices. Each $5 change in the long-term assumed oil price equates to 2.5p per TomCo share. For fun, if oil were to spike to $150 per barrel, then we would be at 40p per share. Actually, a linear extrapolation of my model would produce a NPV of 46p, but I assume that costs rise significantly along with rising oil prices, (which is not necessarily the case by the way).

The other key assumptions are as follows:

Cost per barrel rises to $44.5 per barrel in the initial years of no production, (from $38 per barrel in analyst models) then is flat for the life of the project. And, I assume that the long-term oil price is fixed for the life of the project. Flat costs and prices are more conservative than assuming, like many analysts do, that both costs & realized prices go up by say 2% per year. Escalating both costs and prices makes the margin go up each year.

Instead of first production in early-to-mid 2015, I assume only one capsule is completed in all of 2016, RL is probably expecting first oil in mid-2014, (my guess, not the company's). Just 1 capsule in 2016 compares to the 6 annual capsules that are expected to be reached in the first stage of growth. In addition, I incorporate a slow ramp-up to max production levels. My model has peak annual production in the year 2023, 8 years after first oil. The assumed project life is 20 years, (from 2016) over which ~90mm barrels are assumed to be extracted. 90mm barrels would be 74% of the 123mm barrels identified by SRK.

My model has a 40% contingency on cap-ex and includes $5mm per year of annual maintenance cap-ex that is not included in other analyst's models. Fully diluted shares in my model are 1.725 billion, which assumes a pro forma issuance of 215mm shares at 3.5p each later this year. Finally, and importantly, my 23p valuation at spot WTI of $107 utilizes a 13.5% discount factor. Emerging oil sands projects in Canada are routinely valued with 8%-10% discount factors. The 13.5% rate is an average of 12% and 15%. I strongly believe that if a super-major signs on with Red Leaf, that the discount factor should be 12%, not 13.5%.

Not included in my model is a combined $6 per barrel of margin, (still a conservative figure) for possibility cheaper transport options AND realized prices at a premium to the prevailing WTI price. Both of these outcomes are reasonably likely, but not in my base case. Needless to say, if I were to add $6 in margin and use a 12% discount rate instead of 13.5% and the $107 per barrel long-term oil price, the NPV jumps higher, to approximately 33p from 23p.

Where should TomCo trade vs. the 23p DCF derived NPV? A lot higher than 1.7p. If after a super-major official signs on with Red Leaf TomCo were to trade at a 75% discount to NPV, that would equate to a price of about 6p per share. Said another way, TomCo's current share price is only ~7.5% of its NPV (13.5%, $107). Over the next 2 years, I envision TomCo's discount to NPV declining significantly. 2 years from now, TomCo could be trading at 33% to 50% of its NPV (10%), or 13p-20p per share. This leads me to believe that TomCo will probably be taken out at a price of 15p-20p per share within 2 years.

[wild_goose] 28/2/2012 21:36:34

Sir R,

I am a new boy on the block.

Can you tell me about "the sting"

Come back.

[wild_goose] 28/2/2012 21:34:41

Calmm down guys.

$1 million get you a plot.
Just the way it is.

Are posters saying we don't own the mineral rights to the plots.

Forget Chevron, they will be investing billions in the deep water offshore fields, not small nuts like this.

[sir rational] 28/2/2012 21:25:07

Time to sell if you want to salvage anything from this sting

[cuthbert cuthbertson senior] 28/2/2012 21:23:14

Rmart you must be really thrilled with your ramping mates, this was set to above 2p if your mates had refrained from selling

[wild_goose] 28/2/2012 21:19:17

Yaris,

Can you tell mme who the lying towered are, fore warned is fore armmed.

I can see already, I amm going to like you.

[wild_goose] 28/2/2012 21:16:04

Bit new to this share.

I have been told they have a $2 million loan.

Can anyone say where this money Combes from.

Word on the street is there is Jewish money and interest.

However, could also South African or Russian.

[yarisverso] 28/2/2012 20:51:28

Thanks Wild Goose, you are not the first. At least you have the decency to admit a mistake as opposed to the other lying tozzers on her.

[darncee] 28/2/2012 20:40:49

No worries wild goose. Take a look at oil shale instead. Also check out Redleaf Resources process. It's genius!

[darncee] 28/2/2012 20:23:28

Wildgoose,

No shale oil or fraccing here

[darncee] 28/2/2012 20:20:22

I have never heard such blatant disinformation! I have spoken to Komlosy myself about this and he said that the BLM ruling will have no bearing on Tomcos school leases. Utterly obtuse!!

[wild_goose] 28/2/2012 20:17:17

How's it going gang.

Word on the street is that the share price is very low, given the future potential.

Shale oil,

Does it work.

I get the impression that the pressures needed, to do the fracture, are too large.

At present, they are using up to 4 pumping units, it does not do it.

Not saying it won't work, we need higher pressures.

This may not be available from mobil units, ie trucks, may need a static pump on site.

[fumanchuchu] 28/2/2012 20:08:18

It applies to ALL land. Stop lying.

[darncee] 28/2/2012 19:54:09

Fumanchuchu has tumbleweed for brains

[yarisverso] 28/2/2012 19:50:52

Another stupid post from FMCC. Why bother posting when you haven't a clue what you are talking about? The BLM has no jurisdiction over private land. Otherwise they would have jurisdiction over the WHOLE of the USA. BLM land is land that no one else wants. Please, don't expose yourself to more ridicule. The BLM is reducing the land it has jurisdiction over and open for oil shale development by 75%. Therefore 25% is still open for development. Go away ignoramus, you put your foot in it every time you post. Do you understand the difference between freehold and leasehold? Look at it like that, dear boy.

[fumanchuchu] 28/2/2012 18:31:34

Laws apply to everyone - private as well as public. It matters diddly whether the land is in private or public hands. Environmental as well as other laws are applicable to one and all. Think about it (if you are capable)... if doing work on private land meant you are above the law that would mean every company in every industry would have free reign to do whatever they wished on that private land.