Tuesday, April 1, 2014

Potential Lynden Valuation Scenarios

Should Chesapeake's share of Mitchell Ranch revert back to Lynden Energy and Crownquest, which is mentioned by Torrey Hills Capital and Keith Schaefer as a possibility, Lynden would have approximately 51,000 net acres at Mitchell Ranch.  In addition, Lynden has approximately 5,966 net Wolfberry acres.

Lynden's recent transaction with Breitburn at $48k/acre and Diamondback Energy's recent Wolfberry transaction at $61.5k/acre demonstrate the potential of the Wolfberry acreage.  One can determine Lynden's potential land valuation by assigning values to both their Woflberry and Mitchell Ranch acreage.  Assigning $20k/acre to $40k/acre for the Wolfberry and $2k/acre to $5k/acre for Mitchell Ranch and dividing by 143.5 million shares results in potential valuations of $1.54/share to $3.44/share. 

Lynden's exposure to these two plays makes this an interesting story with potential upside from the current $0.84/share price.  Many people have touted Lynden Energy over the past year or so including Keith Schaefer of the Oil and Gas Bulletin, Torrey Hills Capital/Baby Bulls, Cormark, Thom Calandra, and Mat Wilson of Pinetree.   Could this be Lynden's time?  

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