Let me see if I've got this right.
NZ has a market cap of $83 million at the close.
In their last update on January 17th, they reported the three Copper Moki wells are producing at an average rate of 273 barrels of oil per day, and Waitapu-2 at 151 for a total of 424 per day. Additionally, the gas was flowing at around 770? mcf/day.
Arakamu-1a and Arakamu-2 are still unknowns.
Wairere-1 should be spudded by now.
They had $43.9 million in cash deposits at the end of November, but placed $35 million on deposit to cover the rest of the Origin purchase, leaving them with $8.9 million at that time. The Origin agreement was for $42 million worth of assets. In other words, about half of the current market cap. Of course, when the deal was done in May, the stock was in the $2.25 to $2.50 range, so it was about 14% of the market cap back then. As the price of oil has gone up since then, I doubt the assets have lost value.
In the Nov update, 2P reserves increased 150% over Dec 2011 numbers. Nothing wrong with that. 3P was up to 985 Mboe.
In the first 3 quarters, they had an average netback of over $77/bbl, and a positive cash flow of $11.9 million. That equates to about 568 bbl/day. The stock was trading at about $1.33 at the end of November when their Q3 results were released. I was hoping they would be able to keep growing this bbl/day number slowly and maybe get it up to 700 bbl/day by the end of Q4, and just keep growing the company incrementally for the following year.
The next update from the company was 3 weeks later, Dec 21. This was the first time I noticed the company mention a 3000 boe/d target - and at the end of Q1, 2013 no less! Well, I didn't see how that would be possible. No major discoveries had been announced that would give them a 6X multiple of their current production. It seemed like more of an off the cuff comment. It probably shouldn't have appeared in a company news release. Well, the market seemed to treat it as a pie in the sky target and pretty much ignored it. As you can see by the stock remaining firmly planted in the mid $1.30s despite this 6x production multiple target being mentioned. Also, since the stock price continued on in the mid $1.30s range for another 4 weeks, it seemed that nobody was expecting an increase at all in their production amount.
Then the January 17th news release came out. Due to temporary(?) technical issues, the barrels produced per day had apparently fallen from 568 to 424.
Anyone who has talked to Rhylin is expecting an update this coming week. They company should also have the quarterly results out by the end of the month.
I for one don't see any reason for the share price to have been cut in half from the production decline in the last update. In my opinion, the assets alone are worth more than the current market cap of the whole company. If you throw in $14 million per year of positive cash flow with $77 plus netbacks (500 bbl/day x $77 x 365 = $14M) then I think it should be trading much higher. However, if they actually do come anywhere close to their target this YEAR and they start producing 3000 bbl/day and taking in an $84 million per year average, ie, the same as the current market cap, then they will just have to be trading at many multiples of their current stock price.
I'm still amazed that they would toss out a target six times higher than their normal production level.
Unless they suspect something that they just haven't reported on yet. :)
Please let me know if I've made any mistakes in my numbers above and do your own DD before buying.