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SPP again



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By largeinvest

Posted: Wednesday Jan 11 3:32:35PM 2006

It depends on who bought the shares to begin with. Flow through shares are generally bought by funds such as http://www.sentryselect.com/og_FT2004.html and bought at a price that is higher then market. They typically will hold until monetization and the investor gets tax benefits.

By largeinvest

Posted: Wednesday Jan 11 10:45:53AM 2006

First of all SPP is currently producing 450. The news release they put out was on Dec 27 and they said our year end rate will be 450. Ok so that is four days later. I think they had a good idea this was going to be tied in within days. Next, what Doren actually said if you read his update again is that he "anticipates" 700 BOEPD at the end of Q1 for XPD. With SPP I expect anywhere from 600-700 at the end of March. Taking into account the production to be tied in, the few wells they are going to drill in Q1 and natural production declines. The reserves were updated last at Sep 30. At that time NAV was around 60 cents. Since then they have drilled 9 successful wells most of them gas that will double production. So I assume the NAV is a lot higher and add in the 3.5 million in cash. If I had to speculate what it is right now with reserve additions I would guess $1.20. So which one is cheaper? They both have the same relative production in Q1 but SPP has 8.5 million less shares. Hence based on all information available and computing relative ratios, if SPP were to trade at a valuation level similar to XPD at .66cents currently then SPP should be at .94. So its fairly valued. I am awaiting Dorens report for further confirmation of my research.

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