Summary:
The company is accelerating shareholder value primarily by rapidly building
its proven and probable reserves, rapidly increasing production, and increasing
total current assets. The foundation for rapid future growth for many years to
come is now in place and set to commence in 2008.
Recent developments:
- Company has doubled reserves each year since 2005 and expects to double them again in the FY ending FY 2008
- Production increases in new Fiscal Year estimated to increased 300% from 1mcf/day to 3-4 mcf/day when grant for additional compression is received in Feb 2008
- The new Rockies Express Pipeline (REX) due to come online Jan 08 will allow natural gas producers to recognize full value for the commodity they produce by giving them ability to deliver to attractive markets in the midwest. The historically suppressed pricing of Rockies natural gas prices in 2007 was a direct result of there being no pipeline to the midwest markets.
- A possible re-pricing of the companies 12 BCF (estimated to increase to 24BCF in Feb 2008) proven reserves is also possible due to REX. Currently, the company has prices its reserves at $2.50/BCF. A re-rating here would significantly improve the companies intrinsic valuation, but this will first require an upward shift in the industry based calculation of $2.50/bcf, and there is no known time line for when that will be.
Significant increases in production as a result of the compression grant and significant increases in future 2008 natural gas pricing in the Rockies will markedly improve the company's cash flow and income statements in the FY ending Feb 2009. Further increases in the companies proven and probable reserves will also increase the bottom line and build shareholder value in FY Feb 09.
Substantial increases in the underlying stocks monthly volume suggests this company is under now under accumulation.
For a more comprehensive overview of the company, please go to www.successfultradingtips.com.
$1.15 (12/09/07)
