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10:38
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Originally posted by orion123
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For discussion let me suppose that I'm a new investor studying to take a position in FPL. For the sake of simplicity I disregard the debt factor and assume that FPL is debt free and has enough cash to drill a well and bring any other wells it has into production. So I speculate that FPL may have a production of 500bbls/d within a year. Should this be the case and FPL claiming that it's profitable with oil at $30./bbl that means they're saying they have (today's prices) a nett profit of ~$17/bbl. Producing 500bbls/d for say 350 days then = ~$3MM. With ~ 300MM shares this equates to a profit of $0.01/s and with the shares currently selling at ~$0.021 that's not a bad return at all, even if quartered. For existing shareholders like myself that's still very O.K. however for early entry shareholders it's not good. Now, noting that the company does not have to repay debt, has assets far exceeding liabilities, has an income, albeit small, with all the indicators pointing to an increase, plus (IMO) very capable directors, I'd be very much inclined to take a punt. Another, and big plus, for FPL is that its' oil field is in the USA where enterprise is encouraged, unlike in Australia where government and vested interests want to stop virtually everything. Just an aside into world oil prices and supply , some of the wells in the Ghawar are pumping as much as 60% water, and as stated in TWILIGHT IN THE DESERT "as Ghawar goes, so goes the world.
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