Lynden Energy Corp. released an update on its Tubb A#1 Wolfberry well. This is the first well that Lynden and Crownquest have drilled at their Tubb Prospect Area. This well averaged 109 barrels of oil per day over the first 23 days and 106 mcf/da in the eleven days since it began producing gas. Lynden has a 35.55% working interest in Tubb and it is likely that with the Tubb production, Lynden is meeting their projection of 500 boe/d. Of additional significance is that the oil gravity is 43 degrees API which means that the oil that Tubb is producing is of the highest value!
The news release says "Initial results from the well have exceeded management's expectations and are suggestive of the significant development potential for the relatively untested Tubb Prospect Area." It also states that there could be approximately 170 gross wells developed on the acreage.
Since the market appears to be valuing Lynden on the West Martin and Wind Farms acreage only due to that being the area that has current reserves, success at Tubb has the ability to dramatically increase value. Tubb is on the eastern edge of what is considered to be the fairway of the Wolfberry Trend but if it is ultimately proven to be an area that is developable, then the market should start assigning value to Lynden's Tubb land. Lynden's net Tubb acreage is 2,470 acres and a valuation of only $10,000/acre would increase Lynden's value by $25 million. Of course, if the land ultimately becomes as valuable as typical Wolfberry land, then it's possible that values could approach the $35,000/acre that is currently being paid for Wolfberry land. This news release is indeed exciting news!
Of additional note, Chesapeake received approval to revise their current S150H horizontal well permit at Mitchell Ranch last week. The revision changes the lateral length as well as revises the well type from an injection well to a producer/oil well. Chesapeake is actively continuing their drilling at Mitchell Ranch and the change to a producer well is a good indicator.
Showing posts with label Chesapeake. Show all posts
Showing posts with label Chesapeake. Show all posts
Tuesday, January 31, 2012
Tuesday, January 17, 2012
Commentary on Lynden Energy's volume and stock price
Lynden Energy Corp. has seen another large increase in selling volume. The selling appears to have started with National Bank selling a large part of their LVL holdings. We don't believe the selling is associated with LVL's core Wolfberry holdings as Wolfberry land still commands a high price per acre and Wolfberry lands are a relatively low risk play. Given LVL's past success rate with their completed Wolfberry wells, it would be hard to believe that the selling is related to that part of their holdings.
Results from LVL's Tubb area have not yet been released. Again, this part of the Wolfberry play is low risk so the selling should not be related to any news leak from it as the play should only add to the upside.
LVL's Mitchell Ranch project provides the big upside potential for the stock price. Chesapeake Energy, which has been confirmed as the joint venture partner, has six active well permits. Most recently, a horizontal well permit was obtained on January 10. It appears that CHK is spending a large sum on the play and still actively drilling. A miss at Mitchell Ranch could have a short term negative impact on the stock but we don't believe results are known yet and given CHK's recent permit activity, it looks like they are still drilling.
Overall, we still believe that LVL is a buy. Based upon their recent success on their core Wolfberry lands and recent Wolfberry transactions, LVL is worth more than twice its current value for the Wolfberry lands alone and should make this a relatively safe investment. It appears that LVL is an easy double from these prices. Our guess is that National Bank wanted out for a reason possibly not related to LVL. If that's the case, then that makes LVL a strong buy at these levels.
This is just an opinion and please complete your own due diligence.
Results from LVL's Tubb area have not yet been released. Again, this part of the Wolfberry play is low risk so the selling should not be related to any news leak from it as the play should only add to the upside.
LVL's Mitchell Ranch project provides the big upside potential for the stock price. Chesapeake Energy, which has been confirmed as the joint venture partner, has six active well permits. Most recently, a horizontal well permit was obtained on January 10. It appears that CHK is spending a large sum on the play and still actively drilling. A miss at Mitchell Ranch could have a short term negative impact on the stock but we don't believe results are known yet and given CHK's recent permit activity, it looks like they are still drilling.
Overall, we still believe that LVL is a buy. Based upon their recent success on their core Wolfberry lands and recent Wolfberry transactions, LVL is worth more than twice its current value for the Wolfberry lands alone and should make this a relatively safe investment. It appears that LVL is an easy double from these prices. Our guess is that National Bank wanted out for a reason possibly not related to LVL. If that's the case, then that makes LVL a strong buy at these levels.
This is just an opinion and please complete your own due diligence.
Monday, December 19, 2011
Lynden's partner at Mitchell Ranch
Through research of public records, we have confirmed that Chesapeake Energy is indeed the company that Lynden Energy Corp. and Crownquest leased a portion of the Mitchell Ranch to. Chesapeake applied and received permits for two vertical wells and three horizontal wells on their leased land. Recently, Chesapeake obtained a permit for a horizontal sidetrack well bore at the S250H location. It appears that Chesapeake is actively drilling and spending a large sum on their wells at Mitchell Ranch!
Friday, December 16, 2011
Tax Loss Selling Makes Lynden a Buy
Tax loss selling appears to be dragging Lynden Energy Corp. down. Shares are trading in the $0.40 range giving the company a market cap below $40 million.
A $40 million market cap values the 3,841 acres that Lynden has at their West Martin and Wind Farms projects at $10,000/acre. The market cap does not reflect any value for the Tubb and Mitchell Ranch prospect areas. The West Martin and Wind Farms areas include 9.8 mmboe of proved and possible reserves for the company and is in an area where Wolfberry land is selling for up to $35,000/acre.
Given the proposed NCIB buyback that will be taking place shortly, current drilling of their West Martin and Wind Farms area, forthcoming results from their first Tubb well and exploration by Chesapeake Energy at Mitchell Ranch, Lynden's price appears ready to bounce. Now seems like the time to take advantage of tax loss selling and represents a tremendous buying opportunity!
A $40 million market cap values the 3,841 acres that Lynden has at their West Martin and Wind Farms projects at $10,000/acre. The market cap does not reflect any value for the Tubb and Mitchell Ranch prospect areas. The West Martin and Wind Farms areas include 9.8 mmboe of proved and possible reserves for the company and is in an area where Wolfberry land is selling for up to $35,000/acre.
Given the proposed NCIB buyback that will be taking place shortly, current drilling of their West Martin and Wind Farms area, forthcoming results from their first Tubb well and exploration by Chesapeake Energy at Mitchell Ranch, Lynden's price appears ready to bounce. Now seems like the time to take advantage of tax loss selling and represents a tremendous buying opportunity!
Monday, October 31, 2011
Energen and Linn Energy acquire $317 million in Wolfberry acreage, could this mean buying Lynden is like buying an oil field for free?
Energen Resources Corp. and Linn Energy plan to acquire Wolfberry packages totaling $317 million in the Permian Basin.
Energen announced that they will purchase two Wolfberry packages for a total of $211.9 million. The properties are located in Martin, Howard and Glasscock counties and include production of 1.5 mboe/d, proved reserves of 17.08 mmboe, and proved plus probable reserves of 24.24 mmboe. The metrics for this deal are $4/boe for probable reserves, $10.46/boe for proved reserves and $119,073 per boe/d according to Derrick Petroleum Services.
Linn Energy announced that they signed purchase agreements for two bolt-on acquisitions in the Wolfberry for $105 million including net production of 800 boe/d and proved reserves of 8.3 mmboe. Metrics for this deal are $12.65/boe for proved reserves and $131,250 per boe/d per Derrick Petroleum Services.
Here is what is interesting, comparing these deals/metrics with Lynden Energy Corp.'s latest news releases confirms Lynden's Wolfberry value and reveals its tremendous upside at their Tubb and Mitchell Ranch projects!
From Lynden’s news release on October 28:
- Proved plus Probable reserves are 6.77 million barrels of oil and 18.15 bcf of gas (9.8 mmboe) as of 6/30/11. These reserves are attributed to the West Martin and Wind Farms lands in Martin and Glasscock Counties.
- Proved reserves are 3.29 million barrels of oil and 8.63 bcf of gas (4.73 mmboe).
From Lynden’s news release on October 13:
- Daily production is 423 boe/day.
Using Energen deal metrics for Lynden’s reserves equates to $69.8 million (5.07 mmboe x $4/boe + 4.73 mmboe x $10.46/boe = $69.8 million). Using Energen’s production metrics for Lynden equates to $50.4 million (423 boe/d x $119,073 = $50.4 million).
Using Linn deal metrics results in Lynden proved reserves equal to $59.8 million (4.73 mmboe x $12.65/boe = $59.8 million) and based upon daily production equal to $55.5 million (423 boe/d x $131,250 = $55.5 million).
These two deals demonstrate valuation of Lynden’s West Martin and Wind Farms Wolfberry lands alone to be between $50.4 million and $69.8 million. These values are based upon reserves as of 6/30/11 and 423 boe/d production. Of course, as Lynden’s production grows towards 500 boe/d, these values increase even more.
Several points should be noted:
- These valuations are higher than Lynden’s current market cap but provide a reasonable value of their West Martin and Wind Farms Wolfberry Projects.
- West Martin and Wind Farms are located in the same counties as the Energen deal lands.
- Tubb property in Howard County and Mitchell Ranch do not have any reserves or production attributed to them in the above analysis
Adding in Lynden's other lands results in tremendous upside potential!
Lynden’s West Martin and Wind Farms net acreage equals 3,841 acres (43.75% x 5,488 + 30.625% x 1,127 + 43.75% x 2,503 = 3,841 acres).
Lynden’s Tubb net acreage equals 2,469 acres (35.5% x 6,956 = 2,469 acres).
Mitchell Ranch net acreage equals 34,150 acres (50% x 67,400 + 1.25% x 36,000 = 34,150 acres).
Using a valuation of $60 million for the West Martin and Wind Farms acreage, knowing that Tubb is likely to have Wolfberry success (conservatively estimating $10,000/acre valuation for Tubb lands), and assigning a valuation of $2,000/acre for Mitchell Ranch results in a potential value of over $150 million or three times the current market cap. Upside includes additional value to be realized at West Martin and Wind Farms, potential success at Tubb resulting in valuation up to $25,000/acre or more, and potential success by both Lynden in the Wolfcamp at Mitchell Ranch and Chesapeake in the Mississippian resulting in potential valuation of up to $10,000/acre. It’s clear to me that Lynden has huge potential! Approaching anything close to those valuations could mean that Lynden could eventually have a market cap worth several hundred million dollars.
What does this all mean? The opportunity is out there to buy an oil field in the exploding Permian Basin for FREE! How? Given the above mentioned valuations, it’s easy to see that the company is valued for its West Martin and Wind Farms Wolfberry assets alone. The valuations DO NOT take into account the Tubb or Mitchell Ranch areas. Buying this stock is like buying the company's developed assets which are worth the value of the stock alone - together with the Tubb and Mitchell Ranch project for FREE! There is tremendous upside potential in the Tubb Prospect Area which is a relatively low risk play in the Wolfberry and the Mitchell Ranch land which CHK paid a good amount for and is spending a large sum to determine the viability of development of the Mississippian zone.
Buying Lynden at its current valuation could be looked upon as buying their Tubb Prospect Area and Mitchell Ranch Project for free and Lynden could be a stock worth several dollars per share!
Just our opinion and please do your own due diligence.
Energen announced that they will purchase two Wolfberry packages for a total of $211.9 million. The properties are located in Martin, Howard and Glasscock counties and include production of 1.5 mboe/d, proved reserves of 17.08 mmboe, and proved plus probable reserves of 24.24 mmboe. The metrics for this deal are $4/boe for probable reserves, $10.46/boe for proved reserves and $119,073 per boe/d according to Derrick Petroleum Services.
Linn Energy announced that they signed purchase agreements for two bolt-on acquisitions in the Wolfberry for $105 million including net production of 800 boe/d and proved reserves of 8.3 mmboe. Metrics for this deal are $12.65/boe for proved reserves and $131,250 per boe/d per Derrick Petroleum Services.
Here is what is interesting, comparing these deals/metrics with Lynden Energy Corp.'s latest news releases confirms Lynden's Wolfberry value and reveals its tremendous upside at their Tubb and Mitchell Ranch projects!
From Lynden’s news release on October 28:
- Proved plus Probable reserves are 6.77 million barrels of oil and 18.15 bcf of gas (9.8 mmboe) as of 6/30/11. These reserves are attributed to the West Martin and Wind Farms lands in Martin and Glasscock Counties.
- Proved reserves are 3.29 million barrels of oil and 8.63 bcf of gas (4.73 mmboe).
From Lynden’s news release on October 13:
- Daily production is 423 boe/day.
Using Energen deal metrics for Lynden’s reserves equates to $69.8 million (5.07 mmboe x $4/boe + 4.73 mmboe x $10.46/boe = $69.8 million). Using Energen’s production metrics for Lynden equates to $50.4 million (423 boe/d x $119,073 = $50.4 million).
Using Linn deal metrics results in Lynden proved reserves equal to $59.8 million (4.73 mmboe x $12.65/boe = $59.8 million) and based upon daily production equal to $55.5 million (423 boe/d x $131,250 = $55.5 million).
These two deals demonstrate valuation of Lynden’s West Martin and Wind Farms Wolfberry lands alone to be between $50.4 million and $69.8 million. These values are based upon reserves as of 6/30/11 and 423 boe/d production. Of course, as Lynden’s production grows towards 500 boe/d, these values increase even more.
Several points should be noted:
- These valuations are higher than Lynden’s current market cap but provide a reasonable value of their West Martin and Wind Farms Wolfberry Projects.
- West Martin and Wind Farms are located in the same counties as the Energen deal lands.
- Tubb property in Howard County and Mitchell Ranch do not have any reserves or production attributed to them in the above analysis
Adding in Lynden's other lands results in tremendous upside potential!
Lynden’s West Martin and Wind Farms net acreage equals 3,841 acres (43.75% x 5,488 + 30.625% x 1,127 + 43.75% x 2,503 = 3,841 acres).
Lynden’s Tubb net acreage equals 2,469 acres (35.5% x 6,956 = 2,469 acres).
Mitchell Ranch net acreage equals 34,150 acres (50% x 67,400 + 1.25% x 36,000 = 34,150 acres).
Using a valuation of $60 million for the West Martin and Wind Farms acreage, knowing that Tubb is likely to have Wolfberry success (conservatively estimating $10,000/acre valuation for Tubb lands), and assigning a valuation of $2,000/acre for Mitchell Ranch results in a potential value of over $150 million or three times the current market cap. Upside includes additional value to be realized at West Martin and Wind Farms, potential success at Tubb resulting in valuation up to $25,000/acre or more, and potential success by both Lynden in the Wolfcamp at Mitchell Ranch and Chesapeake in the Mississippian resulting in potential valuation of up to $10,000/acre. It’s clear to me that Lynden has huge potential! Approaching anything close to those valuations could mean that Lynden could eventually have a market cap worth several hundred million dollars.
What does this all mean? The opportunity is out there to buy an oil field in the exploding Permian Basin for FREE! How? Given the above mentioned valuations, it’s easy to see that the company is valued for its West Martin and Wind Farms Wolfberry assets alone. The valuations DO NOT take into account the Tubb or Mitchell Ranch areas. Buying this stock is like buying the company's developed assets which are worth the value of the stock alone - together with the Tubb and Mitchell Ranch project for FREE! There is tremendous upside potential in the Tubb Prospect Area which is a relatively low risk play in the Wolfberry and the Mitchell Ranch land which CHK paid a good amount for and is spending a large sum to determine the viability of development of the Mississippian zone.
Buying Lynden at its current valuation could be looked upon as buying their Tubb Prospect Area and Mitchell Ranch Project for free and Lynden could be a stock worth several dollars per share!
Just our opinion and please do your own due diligence.
Friday, October 14, 2011
Lynden Provides Update
Lynden Energy Group released an update on their Wolfberry and Mitchell Ranch projects yesterday. Highlights include:
- The Wolfberry Project now has 19 gross wells tied-in and producing.
- The Wolfberry Project now has 19 gross wells tied-in and producing.
- Lynden's share of production is 423 boe/day over the last 30 days, of which 72% is oil.
- Lynden's current Wolfberry development is primarily in Martin and Glasscock Counties and includes 3,841 net acres. Their Wolfberry development is low risk and they have had 100% success with their wells.
- Lynden also has 2,469 net acres in the Tubb Prospect Area in Howard County with their first well scheduled to spud in late October.
- Lynden has approximately 34,150 net acres at their Mitchell Ranch Project.
- Keith Schaefer from the Oil and Gas Investments Bulletin has stated that Lynden's JV partner at the Mitchell Ranch is Chesapeake Energy! This is extremely significant in that Chesapeake has been very active in accummulating Mississippian play acreage and is one of the largest E&P companies working in the area. Chesapeake has undertaken a "multi-well vertical/horizontal drill program" at Mitchell Ranch.
- Lynden has achieved success in three Wolfcamp intervals at their Spade 17 #1 well at Mitchell Ranch.
Tuesday, June 14, 2011
Lynden posts updated Inverstor Presentation
Lynden Energy Corp. has posted a new Investor Presentation on their website. A couple highlights:
1. Wolfberry project now includes 5,985 net acres with 250 BOE/day and estimated production of 450 to 500 BOE/day by the end of 2011.
2. Lynden has 9 gross producing Wolfberry wells and 7 that have been spud or awaiting completion. They have a 43.75% working interest in all but one of those wells. They anticipate 23 gross producing wells and 5 spud by the end of 2011.
3. "Repeatable nature of Wolfberry allows for conservative use of debt financing." This would reduce the need to issue more stock preventing further dilution.
4. Developing "Land Rush" throughout the Eastern Shelf of the Permian Basin with the Mississippian as the primary driver. The Mississippian is being developed in Eastern Oklahoma on similar rock packages as exists at Mitchell Ranch by Chesapeake, Eagle Energy, Sandridge and Range Resources.
1. Wolfberry project now includes 5,985 net acres with 250 BOE/day and estimated production of 450 to 500 BOE/day by the end of 2011.
2. Lynden has 9 gross producing Wolfberry wells and 7 that have been spud or awaiting completion. They have a 43.75% working interest in all but one of those wells. They anticipate 23 gross producing wells and 5 spud by the end of 2011.
3. "Repeatable nature of Wolfberry allows for conservative use of debt financing." This would reduce the need to issue more stock preventing further dilution.
4. Developing "Land Rush" throughout the Eastern Shelf of the Permian Basin with the Mississippian as the primary driver. The Mississippian is being developed in Eastern Oklahoma on similar rock packages as exists at Mitchell Ranch by Chesapeake, Eagle Energy, Sandridge and Range Resources.
Subscribe to:
Posts (Atom)
