gerade in nem anderen Board gefunden, sehr schön, wie da die Bewertungsmöglichkeiten durchgespielt werden
Dear Wealth Daily Reader,
It's was about 6:30 in the afternoon when Jeff Johnson took us to the Petroleum Club of Fort Worth across the street from his office.
The Petroleum Club is a private social establishment, steeped in history and old money...oil money. It's about as " old boys' network" as they come.
You might see Pickens, Forrest Garb, or any of the big Texas oilmen sitting at a dimly lit corner table, with a snifter of Cognac, hammering out deals, or just relaxing after a day in the trenches.
Then, if you're lucky enough to catch the right night, the doors close behind you...
This happened to be one of those nights.
You see, we had flown into Dallas earlier that morning. At the airport I met the Phantom Trader who flew in from Montana. There, we were greeted by one of the early-stage investors.
Jeff took the three of us to his offices in downtown Fort Worth. For the next 8 hours, Jeff told us about " secondary and tertiary oil recovery" and how old, abandoned oil fields in Texas were about to experience a resurgence.
He told us that there was a " buzz" about Texas oil he hadn't heard in at least a decade.
Jeff is the CEO of Cano Petroleum (CFW - AMEX). And this meeting took place in July 2004.
During this meeting, Cano was still a young oil company, trading on the bulletin board for about $4.
Today is a different story.
The stock now trades on the American Stock Exchange and yesterday hit a high of $6.40 a share.
And the best might be yet to come.
Below is a report from the Phantom Trader regarding Cano's latest acquisition. By the way, the Phantom Trader has been involved in Cano since it was trading at the high $3 levels.
It's another example of his " little black book" plays, unknown stocks that deliver one thing: profits.
Sincerely,
Brian Hicks
P.S. It was during this meeting that Jeff and Phantom Trader convinced me Cano was the real deal. I recommended shares shortly thereafter to my members of New America Investor.
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Going Back for More: Cano Petroleum (CFW: AMEX, $5.97)
Regular readers need no introduction to Cano Petroleum.
Cano stunned the market this week with news of its $55 million acquisition of WO Energy and $115 million financing facility. This deal alone boosts production 200%, and proven reserves have grown by 700%.
And get this: A third party SEC Engineering Report gives the new proven reserves a PV10 value of $287 million.
(PV10 is the present value of estimated future net revenues to be generated from the production of proved reserves, determined in accordance with the rules and regulations of the SEC (using prices and costs in effect as of the date of estimation) without giving effect to non-property related expenses such as general and administrative expenses, debt service and future income tax expenses or to depreciation, depletion and amortization and discounted using an annual discount rate of 10%.)
Cano's proven reserves increased in value from $59 million to $347 million. Those reserves grew from 5.5 million boe to 40 million boe, an incredible jump.
Based on Cano's 27 million outstanding shares, the acquisition gives the company a PV10 value of $11.24 per share.
Daily production will be about 1,200 barrels, and operating revenues will be roughly $800,000 per month.
This is the incredible part. In fact, five oil patch veterans I spoke with this week were simply astounded by the figure: Cano paid approximately $1.45 per proven boe.
A steal!
Shares were up on big volume after the news, and I fully expect a revaluation over the coming weeks as news flows through to the institutional community.
Value?
There are three common ways to value an oil & gas deal.
Earnings
This is by far the most conservative method. Based on Cano's news release, this acquisition will bring in $800,000 per month. This puts the company at about $10 million per year in earnings. So with 27 million shares out, that gives us a conservative figure of $0.30 per share in earnings.
Based on a simple 20 P/E multiple enjoyed by the non-growth majors, this gives Cano a value of $6 per share.
Keep in mind that this earnings impact is immediate and we'll see numbers accrue this quarter. Also keep in mind that this type of valuation method doesn't really apply to Cano, largely because of the massive upside in development of its producing properties.
Mid-line value
The company's net PV10 is over $280 million. Average stagnant companies typically trade at a small discount to their PV10. Some trade higher.
A straight-line calculation here gives Cano an $11 per share valuation.
High-line, reserve-based
This method gives most companies between $10 and $15 per barrel of proven reserves. Cano has 40.5 million proven barrels, which equals $400 million, or $14.90 per share.
On the conservative side, analysts typically offer $10 per barrel of proven-producing reserves, plus $5 per barrel of proven undeveloped reserves.
Cano has 7 million proven producing, or ($70 million), and 33 million proven undeveloped ($165 million). Subtract $50 million in debt and we come up with $6.85.
This gives no value to Cano's 80 million probable barrels of reserves, which are worth another $1 per share.
Right now we're looking at, conservatively speaking, an $8 stock. But, and this is the reason we initially bought, there's still 500% upside on the development of its probable reserves through enhanced recovery methods.
Cano's management team is stacked with EOR specialists, and I think we can bank on a big part of those reserves moving into the proven and producing category.
We're still looking at an excellent buy in Cano. And this thing is going to move fast.
If you're new to the Cano story, I urge you to read more at the company's website:
http://www.canopetro.com/
In the meantime, I rate Cano a buy at current levels.
Sincerely,
Phantom Trader