Purchased 200 at C$4.66
Purchased 100 at C$4.43
Target based on value of gas resources: C$11.33
Beacon Securities NAV = C$6.52
Sprott analysis in Value Investor Insight (Analysis ref price = C$3.28)
What’s exceptional about Corridor is the potential amount of gas sitting in the company’s shales. An independent energy research firm recently came out with a report estimating there was on the order of 50 trillion cubic feet of resource there. Our rule of thumb is that 1000 cubic feet of gas in the ground should be worth around C$1 in market value. So if over time Corridor can prove out reserves of one trillion cubic feet, that should be worth C$1 billion in the market. Against a market cap of just under C$300 million, that would produce more than a threebagger.
Even without that, the shares based on current metrics are inexpensive. Assuming $6 per-million-BTU natural gas, on about $50 million in revenue we estimate the company can earn cash flow per share of around C$0.45 in 2010.
