Legacy closes on purchase and says Wolfberry drilling is meeting or exceeding expectations

Legacy Reserves LP announced that they have closed their previously announced acquistion of properties in the Permian Basin (click here to see the release). They also state that "the company's drilling in the Wolfberry play in the Midland area has produced results meeting or exceeding our expectations."

Note on Lynden's Wolfberry Project Reserves

Further review of Lynden Energy Corp.'s Project Reserves report released on October 28, 2010 shows that their Proved plus Probable reserves as of June 30, 2010 was estimated to be $64.0M based upon 2011 oil pricing of $79.54/barrel. That reserve estimate would greatly improve if it were based upon today's oil pricing of over $90/barrel. With Lynden's increased activity in the Wolfberry, that project alone should justify at least $1.00/share.

Lynden has very little downside risk based upon their Wolfberry holdings and any success with their Mitchell Ranch project will significantly increase their value.

Goldman Sachs releases research stating "Permian Basin Renaissance to Intensify in 2011"

Goldman Sachs released a research report stating that they believe that we are still early in the Permian Basin oil renaissance. There are multiple sources of upside including downspacing, exploration success finding additional productive zones and technology to improve productivity. "There has been a sharp pick-up in industry activity in the Permian Basin." They expect the improvements that were realized in the Permian Basin in 2010 to continue in 2011.

The research was very good in calling attention to the upside potential of companies doing business in West Texas including the Wolfberry trend. As more attention is drawn to this area, the companies exposed to the Wolfberry trend should outperform.

Lynden Energy drills three Wolfberry wells

Lynden Energy Corp. announced that they have recently drilled three Wolfberry wells (click here to see the release). They are now cased and ready for completion. The release states that "all three wells had encouraging oil and gas shows during drilling."

Linn Energy Announces 2011 Plans for Drilling Wolfberry

Linn Energy announced its 2011 Capital Program today (click here). They are planning to drill more than 130 wells in the Wolfberry trend which they are calling high rate-of-return liquids focused low-risk, low-cost projects.

Permian Basin is hotter than it has ever been

The Fort Worth Star-Telegram wrote an article highlighting the Permian Basin and Approach Resources. Highlights include:

- "The Permian Basin is hotter now than when oil was $140 a barrel and it may be hotter now than it ever has been," said Ben Shepperd, president of the Permian Basin Petroleum Association.

- Approach Resources is placing a $100 million bet on the Permian Basin focusing on the Wolfberry trend and drilling "Wolffork" wells. These wells target the Wolfcamp and Clear Fork formations.

- The wells produce oil, natural gas and natural gas liquids from multiple formations and can potentially achieve "a two- to three-year payout."

- "The Permian Basin is undergoing a major revival. Midsize and large producers are plowing money into the Permian, through acquisitions of oil and gas properties costing hundreds of millions of dollars. Lease bonuses... are now topping $10,000 an acre."

- "I think the Permian has an extremely good future," Jim Henry said.

Recent Deals Support Huge Potential for Lynden Energy Corp.

In the past two and a half months, there have been eight deals relevant to Lynden Energy Corp. (LVL) and the Wolfberry Trend. These deals range from $4,272/acre to $19,354/acre.

With LVL now having approximately 7,000 net acres in their Wolfberry core area and a 50% interest in the 101,495 acre Mitchell Ranch project, the math alone translates into a MUCH higher stock price! The reserves in LVL's Wolfberry play have been independently valued at $64 million (PV10) based upon $70/barrel oil. LVL's Wolfberry land may have more potential than neighboring land which was likely used for the PV10 valuation as LVL's announced flow rates show that their land is highly productive.

If LVL can get the results they are looking for in their Mitchell Ranch project, we could be looking at a company with a future market cap of $500 million or more!