My quick research shows EGO is hugely overvalued, that is, if...

My quick research shows EGO is hugely overvalued, that is, if the EGO valuation is based soley on Red Gully-1 and Gingin West-1.

EGO has 4,602,658,296 shares & in-the-money options. It market capitalisation @ 4.2 cents per share is $193,311,648

Red Gully-1 and Gingin West-1 recoverable gas is conservatively estimated at between 20 to 33 BCF, together with associated condensate.

The multirate Production Test of the Red Gully-1 has been completed with impressive results of flowing at an average 12 million cubic feet of gas per day and 832 barrels of condensate per day.

Empire is investigating a gas contract for 10 years at a rate of 10 million cubic feet of gas per day with provision for any additional volumes of gas to be sold at a premium spot price to consumers. There is provision in the plant design to increase production to 20 million cubic feet of gas per day.

Empire Oil Company (WA) Limited (Operator) ? 68.75% or 14 to 23 BCF. Using 30BCF, EGO hold 20BCF.

EGO is valued at $9.66 per BTU, which is hugely overvalued. I am unsure about Australia but in the USA, gas sells for $5 per BTU.

EGO, with 69% share, plan to produce 7MCF and 572 barrels per day. At $7/BTU and $85/barrel, this equals $36m in revenue per annum. On 30% operating costs and 40% tax, the NPAT per annum equals $15m.

The earnings per share (EPS) equals 0.3 cents. On a PE ratio of 8, the valuation for Red Gully-1 is 2.6 cents per share.

And this is before any capital costs that may lead to more dilution of the share capital.

A 10 million cubic feet of gas per day, the gas resource of 30BCF will last 8 years.

The cash earned per share, if there is no further dilution = 2.7 cents.

Also, that EGO can maintain a flow rate of 10 million cubic feet of gas per day for 8 years is possibly doubtful.

To end, I think comparing the possible valuation of TNP to EGO is not prudent.