Well, there's risk here for sure, but the potential reward makes this a great bet, which of course becomes a great investment in a suitably diversified portfolio.
Around 80p, I'm in because the missed opportunity of not being in when finance is established is getting too great. I am holding some funds back in case we drop to 75p, and in case we drop but the price rise is slow on a good funding story.
I make likely turnover based on likely assets near $200 per share, based on a price of about $40 per thousand cu ft, and $40 per barrel of oil, current expected reserves and no new finds. shipping, extraction, admin/management costs take most of this, but even 20% gives $20 per share pre-tax. If funding requirements give dilution of 25% we are going to be over £5 per share in eventual earnings after tax. Knock a bit off for the opportunity cost of the investment, but of course add a bit on for other potential discoveries in current interests. This is hard to resist.
The above fag packet calc is very rough and ready - I am not at all sure what margins will be, or what the dilurion will be (no one but company insiders should know that). So not betting the mortgage on it.
Be interested to hear any more educated calculations - or any mistakes I have made...
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