Canaccord Genuity Issues Report on the Permian Basin Highlighting its Enormous Potential

Canaccord Genuity's recent Daily Letter included a comprehensive report on the Permian Basin and Wolfberry play. It is very bullish on oil prices, the Wolfcamp shale and the Wolfberry.

The report states "One acre in the Permian does equal one acre in the next horizontal oil trend." This report is the most complete report we've seen covering the Permian Basin and recent trends. Highlights from the report will be forthcoming.

Action is Clearly Heating Up in the Wolfberry Play

Four recent deals have been announced in the past few days:

Berry Petroleum entered an agreement on October 25 to purchase 9,300 acres in the Wolfberry trend for $180 million. This deal is valued at $19,354/acre.

Energen Resources Corporation signed an agreement on November 1 to purchase 10,360 net Wolfberry acres for $75 million. This deal includes six producing wells and is valued at $7,239/acre.

Also on November 1, Approach Resources acquired 5,033 net Wolffork acres for $21.5 million ($4,272/acre). The asset inlcudes 470 boe/d of current production.

PDC Energy announced on November 3 that it entered into an agreement to acquire 5,760 Wolfberry acres for $40 million ($6,944/acre). This deal includes six wells.

Clearly, this flurry of recent activity is bringing a lot of attention to the Wolfberry Play in West Texas. Lynden Energy Corp. (LVL) has over 5,000 acres in their Wolfberry core area and a 50% interest in the 101,495 acre Mitchell Ranch. It appears that it is only a matter of time before LVL's stock price sees a significant rise!

Approach Resources Announces Wolffork Resource Play

Approach Resources announced that it is planning to drill and recomplete Wolffork wells in the Permian Basin. This clearly demonstrates that companies are realizing the huge potential of these zones. Success here could have huge implications for Lynden Energy Corp. (LVL) at their Mitchell Ranch project.

Several other deals have also been recently announced. They include a $285 million acquisition by Concho Resources, a $352.2 million Wolfberry acquisition by Linn Energy, and a $180 million acquisition by El Paso. The El Paso acquistion is interesting because it is for raw land only without any existing wells. El Paso is targeting the Wolfcamp formation.

Energen to Acquire Wolfberry Properties for $185 Million

Energen Corporation announced today that it will acquire 8,700 net acres of Wolfberry land in Martin County for $185 million. Acquisitions of Wolfberry properties are heating up in Texas. This deal equals $21,264/acre and includes only 19 existing wells.

Lynden Energy Corp.'s (LVL) Wolfberry project is not far behind this property in terms of development and could be there soon. One can easily extrapolate LVL's value based upon the Energen deal.

If we assume that the 19 wells cost approximately $1.6M each and take that out of the price, the Energen deal is essentially worth $155M for the 8,700 acres. This equals $17,770/acre.

Lynden, together with CrownRock has approximately 15,500 net acres with 5 wells in the Wolfberry. Using Energen valuation metrics, the Lynden/CrownRock Wolfberry is worth (15,500 x $17,770) + (5 x $1.6M) = $283M (assuming that LVL’s Wolfberry is as valuable as Energen’s).

Assuming that LVL’s interest in the total Wolfberry acreage is approximately 33%, LVL’s Wolfberry is worth ($283M x 0.33) = $94M.

With 73.3M shares outstanding, LVL's value of their Wolfberry play is $1.28/share!

This does not include any value for Mitchell Ranch, Paradox Basin or other assets such as cash. Mitchell Ranch could drastically increase LVL's value if even a portion of it is successful. LVL could be looking at possible 10x or more increase in their stock price!

Three Recent Deals in the Permian Basin

Three deals have been recently announced in the Permian Basin. Concho Resources announced it will be acquiring a property for $1.65 billion the same day that Apache announced its $3.1 billion acquisition. Prior to that, Linn Energy announced it will acquire properties in the Wolfberry trend for $90 million.

Lynden Spuds First Mitchell Ranch Well, Thom Calandra Considering LVL for Ticker Trax Investment

Lynden Energy Corp. (LVL) and CrownRock have spud their first Mitchell Ranch well. They expect to spud their second well in early July. Excitement is building as Thom Calandra from Ticker Trax wrote an article today highlighting LVL and says that "the company has a shot at leveling the plains here and making a bundle for its investors."

Keith Schaefer of Oil & Gas Investments in Canada says that "the potential to create a lot of value quickly is there."

The article also mentions that Daniel Rice of BlackRock Energy & Resources Fund is a big supporter and large shareholder of LVL. BlackRock and Pinetree Capital are some of LVL's larger shareholders which adds credibility to this company.

Exciting news for this company!

Lynden Energy Corp. Options 101,495 Acres

Lynden Energy Corp. (LVL) has entered into an agreement to acquire a 50% interest in an option to acquire oil and gas leases on a 101,495 acre ranch in Coke, Mitchell and Sterling counties. This is a great opportunity for LVL to participate in a large scale oil project. Together with CrownRock, they are planning two wells to be spudded in June. Success in this play could return multiples to LVL's current stock price!