ORLANDO, Fla., Feb. 8, 2007 (PRIME NEWSWIRE) -- RedChip Visibility, a division of RedChip Companies, announced today that it has issued a research update on Black Dragon Resource Companies, Inc. (Pink Sheets:BDGR).
Joe Blankenship, MBA, CFA Level I Candidate, RedChip Research Analyst, wrote in the report:
"It appears that BDGR's management has identified an opportunity to acquire underused assets in the stripper-well category and grow accumulated production to a meaningful level. To make such an opportunity efficient, there must be a large number of wells in close proximity to keep operating and maintenance costs low. The Company's play in the Caddo Pine Island field might provide such an opportunity.
"On the basis of the reported assets in inventory, we believe that the Company has the ability to produce upward of 9,000 barrels per month from wells on lease, many of which still need to be put into production. With prices at $60 per barrel, this production level had the potential of producing revenue of $4.5 million per year and operating income of $1.5 million. Earnings per share at this level of revenue, assuming operating expenses are contained at current levels, would be about $0.01 per share. Our price target is based on a price/sales ratio derived from one of our comparable public companies, Arena Resources.
"Arena has a strategy similar to BDGR. Arena acquires only existing oil and gas fields and does rework or in-fill drilling. It looks for higher-producing wells rather than stripper wells. At current share prices, Arena is selling for 11 times revenue. Assuming that BDGR can show demonstrable progress in putting wells into production, this Company may well achieve that revenue multiple. At 11 times revenue of $4.5 million, the resulting share price would be $0.70 with the 68.3 million shares outstanding."
To receive a complimentary copy of the RedChip Visibility research update for BDGR, please visit: http://www.redchip.com/visibility/about.asp?page=requestBDGR_Q3_2006.
About RedChip Visibility
RedChip Visibility Research, a division of RedChip Companies Inc., writes fundamental research on small-cap companies. RedChip's success has been documented in Forbes, Barron's and the Wall Street Journal. At RedChip, achieving better visibility starts with a thorough understanding of our client's corporate profile, financial landscape, and institutional perception.
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RedChip Visibility Research Disclosure
RedChip Companies Inc. is an affiliate of the Aurelius Consulting Group, Inc. Black Dragon Resource Companies, Inc. is a client of the Aurelius Consulting Group, Inc. and of RedChip Visibility, a division of RedChip Companies. BDGR paid RedChip Visibility $36,000 for the RedChip Visibility program, which includes this report. The Aurelius Consulting Group received 100,000 shares of Rule 144 stock for 9 months of investor relations service.