Monday, May 9, 2011

Samson Oil & Gas Limited (AMEX: SSN) Q3 2011 Price Target

Recent price: 2.89$
P/E Ratio: 5.58
3 Months Target Price: 4$

Company Description
Samson Oil & Gas Limited is engaged in exploration and development of oil and natural gas properties in the United States. As of June 30, 2010, it had five material producing oil and gas properties. It does not operate any of its material, producing properties; rather, it owns a working interest in each property and has entered into operating agreements with third parties, under which the oil and gas are produced and sold. In June 2010, it agreed to sell 24,166 acres of undeveloped oil and gas leases in Goshen County, Wyoming to Chesapeake Energy Corporation. As of June 30, 2010, the Company’s properties included Jonah Field, Green River Basin, Wyoming; Look Out Wash Field, Green River Basin, Wyoming; State GC Oil and Gas Field, New Mexico; North Stockyard, Williston Basin, North Dakota, and Davis Bintliff, Brazoria County, Texas. It has one wholly owned subsidiary, Samson Oil and Gas USA, Inc.

Confidence Margins
Strong resistance $4.75 (+64%)
Light resistance $4.12 (+43%)
Light support $2.62 (-9%)
Strong support $2.11 (-27%)

As Samson Oil and Gas Limited is in a continued uptrend, this Australian company is very undervalued from a fundamental standpoint. Investors taking advantage of the current break the market is taking relative to shares of Samson Oil & Gas will reap good returns by the end of Q3 2011.

Entry strategy
For the cautious investor:
Buy the stock for 3.00$ or less.

For the risk-taking trader:
The October 2011 5$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 35$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 4.00$, or keep it until 4.75$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 4.00$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.


  1. Just wanted to comment and say that I agree with your price targets. I think seeing $4 is very reasonable by this fall. My only concern is if the broader markets collapse...then that could put a damper on SSN's share price. Either way, I own shares around $3. Oil at $100 may be bad for the economy, but it's great for these oilers.

    Have you heard of Sundance Energy, and if so, any thoughts?

  2. Hi Timster,

    First, thank you very much for your feedback it is gratifying to know that my research is makes sense for my readers.

    As for Sundance Energy, I see it is a penny stock. Are you talking about the securities listed on the Pink Sheets (SDCJF) or the TSX Venture Exchange (SNY)?

  3. Hi Jimmy,

    Yes, I was referring to the pink sheets listing (SDCJF). The only reason I bring your attention to the company is because it, like Samson, is a dual-listing between Australia and the US. Come this fall, the pink sheet listing should be moving up to the AMEX.

    Sundance possesses land in both the Niobrara and the Bakken. The difference between it and Samson is that Sundance tends to obtain small interests in wells, rather than drilling any themselves. I think they currently have working interest in 114 wells (smaller percentages, granted).

    Anyway, check them out if you're interested! I always like to share with and receive stock ideas from other investors.

  4. Hey Timster,

    Sundance Energy seems to be fairly valued at current prices from a fundamental standpoint. Their ownership in those wells is generally a minority stake as you mentioned. I took a look a their reserves and they would need to have 3x more proven and probable reserves to justify acquiring more shares right now. From a technical standpoint however, the company is definitively a buy because of the recent pullback and the coming listing.

    Thanks for the idea, I'll put it on my watchlist to buy if the price comes down.