You've not heard from me before, but I've been following this chat for a while. I'm an energy economist and ROYL investor.
It seems to me it's pretty simple to guesstimate ROYL earnings.
They broke even when gas was around $2.00 in 1999.
They said in a November 30 press release that they sold 70% of their production at $14.50, and that was 7,000 mfc/d, and the rest at short-term spot. That tells me that 100% of their production would be 10,000 mcf/d.
If gas is now averaging $12 in California (see commods.reuters.com), then they are making roughly $10/mcf in margin per mcf.
Multiply by 10,000 mcf/d, and that's $100,000 per day in margin, or $3 million a month. Take out a third for income taxes, and you have $2 million a month in net income. First quarter margin after tax would be approximately $6 million. Divide by 3.77 million shares, and that's about $1.60 in earnings for the quarter.
I think that the 7,000 = 70% press release was only for the owned gas; does not deal with the gas from leases. So, this may be a conservative guesstimate.
No holes in the arithmetic as a general rule. I'd consider your estimate to be a credible top-end estimate.
The reason I'm hedging is that there may be reductions in production (because ROYL's production was falling when comparing the year 2000 to 1999 despite new wells), capital spending, etc. There also may be differences in levels of contract drilling from year to year (which generates some profit but a lot less than selling gas).
The 90 cent figure I posted on this board was probably too low out of an abundance of caution (because I was much too bullish when I used your general logic to project 4th quarter earnings for a different gas stock), and we'll probably meet in the middle at $1.20 to $1.40.
Welcome lazy. Let me put it this way...I just received my latest royalty check from Royale and it is the 2nd highest payout that I have received from them since I have been with these folks and that is 1996. I am having a hard time understanding why the stock is down slightly this morning. I think it's a great buying opportunity at this price. I am now seeing this stock at over $10.00 per share by 15 May and I feel this is conservative. Good investing to you and to your family.
I have just come across Royale, and it looks like a good prospect. I note that you just received a royalty check from Royale - and that a Business Wire dated April 3rd stated that Royale would pay a 15% dividend to shareholders of record as of May 25th ... but something seems amiss. My question is: Will anyone buying ROYL between now and May 25th be entitled to that dividend payment? Thanks in advance for setting me straight.
Two problems. 1) They own only 50% of the reserves outright. They do, however, get paid for their services on the 50% they don't own. 2)Their production declines and they add new wells continuously. I spoke with Investor Relations and they said they currently have about 11,000 flowing (as of mid April) with 2,000 more/day coming online in May or June. A dollar or so is more likely...