 I believe Cano Petroleum is selling far below the liquidation value of there assets. A catalyst is in place for the value of these assets to be realized. Cano is trying to currently liquidate or sell assets. Here is my valuation for the company.

Here is a breakdown of the companies reserves followed by a brief set of values per BOE for these reserves.

Cato: 16 MMBOE
1.9 MMBOE are PDP, 0.5 MMBOE are PDNP, and 13.6 MMBOE are PUD

Davenport Unit: 1.3 MMBOE
0.7 MMBOE are PDP and 0.6 MMBOE are PDNP

Desdemona Field: 4.0 MMBOE
0.5 MMBOE are PDP and 1.2 MMBOE are PDNP

Nowata Field: 1.5 MMBOE
1.5 MMBOE of which is all PDP

Panhandle Field: 28.9 MMBOE
3.4 MMBOE are PDP and 25.5 MMBOE are PUD

PDP assets: 1.9 + 0.7 + 0.5 + 1.5 + 3.4 = 8
PDNP assets: 0.5 + 0.6 + 1.2 = 2.3
PUD assets: 13.6 + 25.5 = 39.1
Total reserve value = 49.4

If the company where to fire sale its assets at rock bottom prices of \$2.50 per barrel of oil than \$2.50 multiplied by 49.4 million= \$123.5 million

\$123.5 million subtracted by total liabilities of \$137 million= 0 (liquidation value)

If the company where to sale assets at fairly rock bottom prices of \$5.00 per barrel of oil than \$5.00 multiplied by 49.4 million= \$247 million

\$247 million subtracted by total liabilities of \$137 million= \$110 million (liquidation value)

If the company where to sale assets at a more reasonable but still cheap price of \$7.50 per barrel of oil than \$7.50 multiplied by 49.4 million= \$370.5 million

\$370.5 million subtracted by total liabilities of \$137 million= \$233.5 million (liquidation value)

Cano has 45.35 total shares outstanding so with my three estimate values I have:

Estimate 1: Negative return

Estimate 2: 110 divided by 45.35 equals \$2.42 a share

Estimate 3: 233.5 divided by 45.35 equals \$5.15 a share

So at rock bottom liquidation prices of \$2 a barrel we could recover nothing. At better rock bottom prices of \$5 a barrel we could recover \$2.42 a share. At these prices purchasing this stock is like purchasing an equity option with a high risk/reward ratio.

(shares currently sell at \$0.37 a share)

Definitions:
PDP= Proved Developed Producing
PDNP= Proved Developed Non-Producing
PUD= Proved Undeveloped
MMBOE= Million Barrels of oil equivalent