On a very slow load-up day like this we can play a game to predict the sale price of the sellable DPTR properties (leases).
OK, let us count all the DPTR leaseholds and compare them to the BLM Petroleum inventory Assessment report.
In the first and the latest Dept of Interior BLM (Burea of Land Management) assessment of the land oil/NG reserves INVENTORY report, EPCA Phase-III, Fall of 2009. These inventory are not the price driven SEC economic reserves, but the true real stuff in the ground. The following major basins are closely involved with DPTR.
(1) Unita-Piceance basin, BLM assessed 361 MBO (M barrel oil) and 14 TCF NG (trillion CF of NG). Margins favor DPTR spots are in here, the new qtr rpt indicated they are NOT for sale, Vega and Garden Gulch. 1P.
(2) Paradox basin. BLM assessed 312 MBO and 1.05 TCF NG. DPTR has 5 leases with a total of 102K acres, 2P. Price $AAAA/acre?
(3) Eastern Great basin. BLM assessed 1,681 MBO and 0.264 TCF NG. DPTR Hingeline has 200K acres of 2P. Price $BBBB/acre?
(4) Wyoming Thrust belt. BLM assessed 89 MBO and 1.7 TCF NG. DPTR has Wind River lease of 47K acres of 2P. Price $CCCC/acre?
(5) Ventura basin (CA). BLM assessed 280 MBO and 0.45 TCF NG. Remember lease#452 ? DPTR got a total of $97M from Fed, but still has the lease of 20K acres, 1P. Price $DDDD/acre?
(6) Denver-Juleberg basin, BLM assessed 17.3 MBO and 0.1 TCF NG. DPTR has 22K acres of producing 1P lease. Price $EEEE/acre?
(7) East Texas Gulf coast, DPTR has Newton, Midway Loop, Caballos and Haynsville, the producing Auystin Chalk, Wilcox & Sligo formations, has the hotest land NG play, Eagle Ford shale lies right underneath it. BLM assessed 17.9 TCF in the already proven S. Texas areas (includes DPTR leases of 78K acres). Price $FFFF/acre?
The very strange thing is :
(8) Columbia River basin (Eastern Central Washington ) BLM assessed 3.7 MBO and 0.856 TCF NG. This basin was counted as a reserve inventory. Hmmmmmmm......, something smells fishy. DPTR and HSE.TO together have 840K acres of 3P, with 5 year extension on the lease last month. Price $GGGG/acre?
(9) DHS drilling unit, CHK already owns 47%, might as well sell the whole thing to them.
After DPTR selled all these leases, the proceeds can be distributed to the 300M common shares.
This would enhance the share value and turn DPTR to a lean and mean smaller company, with much less overhead.
Now place your prices then come up with your total proceeds to be distributed to each share, in addition to the current pps.
My takes are as follows:
$A=$300/acre X 102K = $30.6 M
$B = $300 X 200K = $60 M
$C = $500 X 47K = $23.5 M
$D = $3000 X 20K = $60 M (there could be more than 20K acres)
$E = $2000 X 22K = $44 M
$F = $10,000 X 78K = $ 780 M ($10K/acre may be too high)
$G = $50 X 420K = $21 M
$H = $ 50M (a wild guess)
Grand total sales = $1,069,000,000 or 1069/300 = $3.56 distributed to the common shares ON TOP OF THE CURRENT PPS. $1.4 + $3.56 = $4.96. Closer to Old KKs $7 avg.
Nice write up Joe. You should be running this company. I agree, sell it all off or bring in cash with JVs. I'd definitely go for JV on the shale leases since interest must be very high and shale JVs have been common for big and small. For ex. Rexx did a deal with Williams in the Marcellus. I'd also try to JV on paradox and hingeline, but if no appetite just try and sell.
As you say recapitalize, partner, hedge risk, and drill the crap out of Vega to turn the proved to proved developed. Proved developed is where the real value is
Excellent info, but what about the debt of $654 Mil? Pay that off and the distribution goes from the $3.56 down to $1.38...
I'd love to see a deal in the $3.50 area, think everyone would be happy, especially those buying here like me.
Longtime holders would be ticked, but would like a double from here....