tag:blogger.com,1999:blog-9453798.post4612757542187299782..comments2008-03-26T14:46:13.879-04:00Chad Brandhttp://www.blogger.com/profile/13124194049618873621noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-9453798.post-77757886065163994442008-03-26T14:46:00.000-04:002008-03-26T14:46:00.000-04:00Remember Buffet buys them at 30% discount. Lets say that Buffet thought the business was worth $275B. At a 30% discount that would set an entry target at a market capitalization in the low $190s at a price of That would place the purchase somewhere near 100$ - 105$ per share range.<BR/><BR/>Also, PTR is a play on really 2 things: 1.Big oil companys, they have been getting dragged out behind the shed and shot. I hope they continue to pump lead in them and PTR is quilty by association. <BR/>2. They are a China play, the whole china thing has been getting KO'ed also. Several things play into this. Things such as inflation in China, speculative bubbles regarding the shanghai indexes and speculation on growth slowing down.<BR/>The more these things get talked about the more PTR takes it in the face and the more I like it. <BR/><BR/>Bottom line is that I think it is a bit early to consider PTR. I would like it closer to 100. But we'll see.ryannoreply@blogger.comtag:blogger.com,1999:blog-9453798.post-55442968252751657432008-03-25T20:49:00.000-04:002008-03-25T20:49:00.000-04:00The chinese government is imposing fixed prices on gasoline which is impacting the earnings of Petrochina. I don't think you can come up with a valuation without taking that into account. Even if crude prices do go to $150 per barrel there is no guarantee that PTR will reap the full impact of that. They are certainly not as profitable as they could be with the current price setting.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9453798.post-23790401762834809582008-03-24T13:01:00.000-04:002008-03-24T13:01:00.000-04:00klug - I am not overly familiar with corporate taxes in China, so I can't comment on their tax policies versus a country like Russia.<BR/><BR/>ilan- You are right that my math is not exact and it was not meant to be. I don't know how Buffett chose to value PTR, but energy stocks are typically valued on an "NPV of reserves" basis, so you are right that it is not as simple as I made it seem. I've seen NPV estimates as low as 170 per share on PTR... below my numbers in this example, but well above current prices. The main variable assumption is oil price, as that is far more volatile than changes to reserves.Chad Brandhttp://www.blogger.com/profile/13124194049618873621noreply@blogger.comtag:blogger.com,1999:blog-9453798.post-18174480057669511192008-03-24T10:36:00.000-04:002008-03-24T10:36:00.000-04:00I agree with your basic analysis, but don't you need to adjust the valuation for the reserves of PTR in 2002 vs 2008? I haven't looked into the issue, but if proven and probable reserves have gone down, then PTR's valuation per barrel would be affected. Also, production costs have gone up. So its not as simple as saying, oil went up by 4x, so mkt cap should go up 4x.Ilanhttp://www.blogger.com/profile/12662374848341146241noreply@blogger.comtag:blogger.com,1999:blog-9453798.post-59483063171186997832008-03-24T09:58:00.000-04:002008-03-24T09:58:00.000-04:00it is very good math. I am not an expert but I have one question.<BR/><BR/>How does taxation of oil company in China work? If it is something like Russian taxation of oil company the math is fully mistaken.klughttp://www.blogger.com/profile/10858315900120452988noreply@blogger.com