Why DLS is so Under Valued, page-2

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eshmun

11,185 Posts.

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04/09/15

09:12

Post #: 15933907
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Originally posted by bigal36 ↑

One way of looking at what DLS is currently worth is to consider it from an asset stripping point of view.

Lets say a company decided to take it over and just milk the existing wells and not spend anything on new wells for the next 6 six years.
They could reduce company overheads to say $1M per annum and just keep the net cash currently being generated from the existing wells.
The existing production would drop significantly due to depletion but my guess is over a 6 year period they could still net maybe 10Mboe.
Even at the current POO this could generate net cash (After Tax) of approx $340M and you would still have 3M boe P1 reserves (another net $90M cash) plus all the P2 and P3 reserves.
So even if you sold all the P2/P3 reserves for say $100M that would net you $530M in Cash even at current oil prices.

Current MC is $249M and Current assets less Liabilities is net almost breakeven.

So it theory you could make a 113% after tax return over six years by just doing nothing and if the POO increases during that time you will make considerably more.

On that basis I bought in yesterday at Av 55.5C as the current SP is just ridiculous.

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Good thinking bigal36. Can anyone else try and put forward a how low is low valuation on DLS or pick the guts out of bigal36's argument here?

DLS Price at posting: 54.0¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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Why DLS is so Under Valued, page-2

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