American Patriot is an early stage explorer,
trading with an EV of $635 per acre of net
permit interests.
Net 2C Resources of 2.8 mmbbls at Northern
Star underpin a value of ~$4-5 million for that
asset, but successful appraisal drilling holds
significant upside potential with a target value
of 41 cps if an EV of $2,000/ac is reached.
American Patriot has a business model whereby capital is preserved in the company for future acreage
acquisition and expensive drilling commitments are farmed down for free carry. Peer
companies in the sector with proven productive permits and operating cash flow from
production, trade with enterprise values per acre of net permit held, ranging from
$1,000 to over $12,000 per acre.
American Patriot’s challenge will
be to lift its EV/acre from around
$635/acre towards $2,000/acre
once proof of concept is achieved
and then towards A$5,000/acre
as significant operating cash flow
begins to be established.
Better fields in the USA can
attract values of over US$20,000
per acre.
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The company holds a substantial permit portfolio of
over 35,000 net acres including 8,251 net acres in
Colorado’s DJ Basin, over an area where recent
trades have been undertaken that reflect values of
between US$2,000 and US$5,000 per acre. Regional
work by peer companies is generating increased
interest in the area and adds value to AOW’s
portfolio.
