Wednesday, October 15, 2014

Buying opportunity?

 Along with oil prices, Lynden Energy Corp. has taken a big hit the last few weeks.  The stock price is down over 40% from its high reached on September 2.  This has created a tremendous buying opportunity.  Lynden has acreage located in the heart of the Permian Basin.  Is this a high risk/high reward investment?  Those who have read the analysis on Seeking Alpha in August and agree with the summary can argue that there is little risk in this investment. 

Lynden Energy has zero net debt and a market cap of $80 milllion (US).  With 5,883 net acres in the Wolfberry, Lynden’s per acre valuation is $13,500/net acre (US).  Wolfberry land deals over the past year have averaged $43,870/net acre (US). 

One can look at the valuation metrics a number of ways but the conclusion remains the same, Lynden Energy is undervalued!  Those who have the patience and confidence that LVL will eventually find a suitor to acquire their Wolfberry acreage could realize the significant upside. 

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