DRAGON OIL, WE NEED GAS PRODUCTION NEWS

Another excellent post from Ynot3 on iii:

Dragonites

It’s the end of the year and congratulations are in order not only to Dragon management, but also to you the contributors to this board who have made this such an interesting, knowledgeable, thoughtful and stimulating discussion group (usually without unnecessary recourse to expletives!). I don't know if another exists but I've certainly not come across such a high standard of contributions on any other board. Thank you for the opportunity to share this adventure with you and look forward to an interesting New Year.


2005 Revenue, Earnings & SP estimates

At the risk of boring you with figures, we now have some accurate data with which to make an assessment of Dragon's Turnover, Earnings for H2 and full year, and share value (based on Roderick McGahon's multipliers).

Downes figures for Brent crude gives an average of $59.8 /bbl for H2 2005. If dragon get the same price ratio as they did in H1 ($44.6 : $50.4 ), then they should receive $52.9 /bbl in H2.

The gross and net production in bopd, based on 85% share, and RNS items on this board are :-

15 July 05 LAM 10/110 ...1603 gross ...1363 net
8 August 05 W/O ... 1298 gross ... 1103 net
12 Oct 05 LAM 10/111 ... 2586 gross ... 2198 net
28 Dec 05 LAM 10/112 ... 2950 gross ... 2507 net

That's on top of 14,044 bopd net attributable to DGO for H1 2005.

There is an extra 7171 bopd production from July to December, but in order to get the average over H2 the individual increases have to be time averaged.


Time averaged new production in H2 = 3117 bopd

Total H2 before drop-off = 14,044 + 3,117 = 17,161 bopd

On the basis of my calculations ( 14/10/05 ), a 10.4% reduction should be built into our forecasts for each half year

Total H2 production after allowing for drop-off = 15,376 bopd


Revenue for H2 2005 = 15,376 x $52.9 x 180 = $146.4 mn

That’s an increase of 29.8% over H1 2005 of $112.8 mn. A pretty impressive revenue growth rate over 6 months.
The growth over 1 year is even more impressive at 135% when its compared to the same H2 in 2004 at $62.26 mn.

The total revenue for the whole of 2005 = $146.4 + $112.8 = $259.2 mn.

2005 Earnings based on H1 figures after $16.37 /bbl costs and 30.6% tax = $115.5 mn


Now to get a value for Dragon shares based on Roderick McGahon's multipliers, who would expect to pay in a range of (multiplier) 7-12 times GROSS....or 15-20 times NETT based on current earnings:

7 - 12 X gross would give a value of $1.8 - 3.1 billion
15 - 20 X net would give a value of $1.73 - 2.31 billion

The bottom of this range represents £2.02 per share and the top £3.62, and the average of all these is £2.60 per share.

These are conservative figures not based on future additional profits that are not yet being worked,like gas or doubling production by 2008 etc, but on current earnings.

As Aton says "attractive".