Integrated oil companies liquidating trusts
Now, with additional information available, there is even more reason to believe that the company is even more undervalued than before.
Valuing The Remaining Assets Before receiving strong evidence on how to value Zargon's Enhanced Oil Recovery Project, I had made my assumptions based on valuing this project at zero.
Although Zargon was able to divest its Southeast Saskatchewan properties for a good price, the company still retains just under 400boe/d of nearly 100% oil-producing properties in North Dakota.
Some nearby sales point to what could be a good valuation methodology for these properties.
For a microcap junior producer, even one that has survived so long in such a topsy-turvy environment over the decades as Zargon has, such a drop was just another day at the office.
More important than daily technical moves is the overall outlook of the company, a company which has made definite overtures toward a 'strategic alternative' process.
Given these metrics, we can conservatively estimate a value of about Cmillion for Zargon's EOR project, which returns about 570boe/d at present and is 100% operated.Of course, I knew that this project was worth far more than zero.But without a firm grasp on the fundamentals, I reasoned that if the rest of the company would still return a significant profit if the EOR project was completely worthless, then any value assigned to the EOR project would just be extra icing on the cake.So far, the 'strategic alternative' process has resulted in the sale of two properties - the entire catalog of its Southeast Saskatchewan properties, which drew proceeds of C.5million, and its Killam property, which netted C.0million.Pro forma these sales, the company now finds itself in a much stronger position than before.