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.