I like END around $1.05-$1.10.

40M Barrels of 2P, at $15/2P = $600M; at $20/2P = $800M.

Balance sheet looks messy.

As of 6/30/2009:
Debt:
Senior Notes due 2012: ($81M)
Bank Facility: ($48.5)
Smedvig Convert Bonds: ($47M)
Combined Debt: ($176M)

Cash on Hand: $104M

Net Debt = ($176M) + $104M = ($72M)

Asset Value - Net Debt = Hypothetical Equity
$15/2P case: $600 - $72 = $528M
$20/2P case: $800 - $72 = $728M

What is the correct share count?
Until END approaches ~$2.36, diluted shares is 130M
Assuming something good happens, ultimate diluted shares goes to ~217M

$15/2P Case:
$528 / 130 = $4.06 ... Since this would convert everything, let's use the fully diluted count: $528/217 = $2.43

$20/2P Case:
$728 / 217 = $3.35

So assuming everything converts to common shares, you could argue for END around $2.40 to $3.35


These sorts of values also jive on an EV/daily production basis...let's be generous and assume END only puts Rochelle online, the only project they operate, and they have no big production from the US. So, basically 3,000 boepd from existing production, plus 10,000 boepd from Rochelle.

13,000 boepd x $50,000 per flowing boe = $650M / 217M fully diluted = $3.00

This falls in the middle of the $/2P estimate.

The above make me comfortable buying END at present around $1.05-$1.10. The market is discounting long lead time projects too heavily.