Thursday, December 22, 2011

Concho Resources to buy Wolfberry Play, another solid comp for Lynden

Concho Resources Inc. announced today that they intend to buy Permian assets from Petroleum Development Inc. for $175 million. The Wolfberry Play acreage includes 10,200 net acres, 13 mmboe of proved reserves and 1,100 boe/d production. Valuation metrics for this transaction equal $17,157/acre, $13.46/boe proved, and $159,091 per flowing barrel.

Lynden Energy Corp.'s West Martin and Wind Farms Wolfberry Play lands has 3,841 net acres, 4.73 mmboe proved and 423 boe/d production. Using the above valuation metrics for just Lynden's West Martin and Wind Farms lands equates to $66 million based on net acreage, $64 million based upon proved reserves and $67 million based upon production. These are consistent metrics demonstrating Lynden's core producing Wolfberry lands equal to about $0.70/share. Adding in Tubb and Mitchell Ranch adds considerably to the upside.

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