EEN - Undervalued & Oversold

Madasa...,

Firstly, you can't value 2P reserves at $5 per barrel - this would need to be proven, rather than probable. Secondly, $5 is a rich price for Syrian reserves, I have put a 2P price of $2.40, which if you can bother your arse, comes out to 27p - where you derive £2 from interests me???

The Ryder Scott report, is just a report and to date has one non-commercial well, to back up it up. Nuff said. I have the RS 1.1BBboe risked at 0.75%, giving a NAV of less than $11M (a discount from the $16M that EEN paid) due to poor performance. A strike at Tigris would lead to a reduced risk factor across the portfolio of opportunities. Lets say we reduce the risk by half (i.e. factor becomes 1.5%) this would lead to an 8p increase in price and show that EEN made a good purchase - worth in the region of $22M.

To complete the picture, we need to model some cash flow valuations in order to come up with a target price. Per 1000bopd (gross - API 20ish) 3p to EEN (plus roughly 6p to Syria and 3p to GPX) - so IF, the well strikes oil and pumps 2000 bopd. Then one could expect a share price of:

2P NAV Increase = 27p
4P Increase 8p = 8 p
Cash Flow = 6p

Total = 43p.

From this I conclude that selling a % at 245p, would be a good move. Which is nice as it fits neatly with my 20% rule. However, as always I wait for news and the facts of the matter - but ready to pull the trigger one way or the other.

TGM.