Saturday, February 11, 2012

Energen to acquire Wolfberry property

Energen announced that they plan to acquire 3,200 Wolfberry acres for $65.8 million on Friday.  They are acquiring the acreage from a private seller.  The metrics for this deal equate to $20,300/acre. 

With all of the recent Wolfberry sales, we believe that it's only time before the market realizes the value of Lynden Energy Corp.'s Wolfberry land.  See our previous post for our valuations based upon Lynden's acreage.

Sunday, February 5, 2012

Lynden Update and Valuation

Lynden Energy Corp. has shown steady volume and an increase in their stock price culminating with a spike at the end of the day on Friday since news was released on their first Tubb well.  Success at Tubb has the ability to add considerable value to Lynden's reserves and market cap.  We have run an acreage valuation to demonstrate the huge upside potential in Lynden.

The current market cap of $45 million puts an average value of $1,112/acre over Lynden's West Martin, Wind Farms, Tubb and Mitchell Ranch land.  Assigning no value for Mitchell Ranch still values Lynden's Wolfberry acreage at only $7,132/acre.  Given that good Wolfberry land is selling for up to $35,000/acre and the developing land rush for acreage near Mitchell Ranch, we can calculate the tremendous upside in Lynden.  Looking at these valuations shows the huge potential in Lynden!

                             Acreage        Low            Mid               High
West Martin/WF     3,841           $20k/acre   $27.5k/acre   $35k/acre
Tubb                      2,469           $10k/acre   $20k/acre     $25k/acre
Mitchell Ranch      34,150           $2k/acre     $5k/acre       $10k/acre

Total                                         $170 M        $326 M          $538 M

Our low analysis shows a market cap 3.8 times the current market cap.  Our mid and high show 7.4 times and 12.0 times the current market cap.  Tubb's success gives Lynden a very real chance of seeing these increases in the market cap and we believe that once this company becomes better known by the market, Lynden has a chance to achieve these valuations!