An article posted on Seeking Alpha talks about Devon exploiting the Cline shale. "Devon has chosen to gain access in another region, exploiting the midland
section of the Basin in the Cline formation." The article further states, "With Devon's setting aside of capital money to continually acquire land, its diversified portfolio, focus on oil, healthy
balance sheet, and smart management plays make for a good combined package for a
long-term energy company."
Tuesday, April 17, 2012
Lynden Energy's non-brokered Private Placement
As much as
another private placement dilutes the company, we are very excited and view
this as a positive. The ability to add
funds and ensure the longevity of the company means that Lynden Energy Corp.
will not fall into financial jeopardy.
Given that financing is difficult to obtain in this market, Lynden will achieve
a milestone by obtaining $6.3 million should the placement close fully
subscribed. It appears the company’s
borrowing base is not accelerating as fast as their drilling but the financing
allows some breathing room.
As the volume
today shows, the market is clearly supporting the financing. There are buyers out there who like the story
and buying large blocks. The buyers in
the market and those who participated in the financing have apparently completed
their due diligence and like what they see.
We view
Lynden’s prospects as better than before the private placement was
announced. Surely, the dilution is not
something we were looking forward to but this was anticipated given the rapid
pace of development. The company’s
financial future is now ensured until their borrowing base increases. With support being shown in today’s market and the industry buzz and excitement about the Cline shale,
we believe that Lynden can realize its market cap potential and that this stock
can return multiples.
Wednesday, April 4, 2012
Lynden releases production numbers and comment about Howard Weil 2012
Lynden Energy Corp. reported production after royalties of over 500 boepd on average over a ten day period ending March 31. Highest daily production during the period was 595 boepd! These are excellent numbers demonstrating continuing high production from their Tubb A #1 well as well as shallow declines from their existing wells.
Of significance is that the Tubb A #1 well is still producing over 100 barrels of oil per day. This number does not include natural gas or natural gas liquids and is 90 days after being tied in. Should these numbers be replicated, Lynden has some very special acreage. The Tubb Prospect Area includes 7,341 gross acres of which Lynden's net interest is approximately 2,469 net acres. Additional success here will surely capture industry attention and Lynden's large acreage puts them in a nice position to capitalize.
Recently, Richard Mason wrote an article about Howard Weil 2012. The article titled "Operators Hint at Two New Liquids Plays, Major Permian Discovery" is one more leg to Lynden's story. The apparent industry excitement about the Cline shale is generating a lot of buzz. Devon, Concho, EOG and Pioneer are all actively pursuing the Cline shale. "Pioneer and Concho are now suggesting that the prospective Wolfcamp (Cline) spans the entire Midland basin," the article states. (For those unfamiliar with the Cline shale, it exists just below the Wolfcamp shale zones. Some companies are grouping the shales together and calling them the Wolfcamp shale.)
Tim Leach, CEO of Concho Resources, commented that they have 45,000 net acres of new holdings and their primary target is the Cline shale. "The punchline here is we think this play in the northern part of the Midland Basin will be very similar in returns and composition to the Wolfcamp in the southern part of the Midland Basin."
A couple of additional comments from the article. "Long story short: the horizontal Wolfcamp is on the verge of a substantial breakout in the Permian Bains." Also, Scott Sheffield, CEO of Pioneer, states "People... will will have to buy out smaller independents. It will be really tough to get a large acreage position because most land is held by production by the various operators." Again, Lynden is in an excellent position, because of their 103,400 acre Mitchell Ranch project. The next few months will be very interesting...
Of significance is that the Tubb A #1 well is still producing over 100 barrels of oil per day. This number does not include natural gas or natural gas liquids and is 90 days after being tied in. Should these numbers be replicated, Lynden has some very special acreage. The Tubb Prospect Area includes 7,341 gross acres of which Lynden's net interest is approximately 2,469 net acres. Additional success here will surely capture industry attention and Lynden's large acreage puts them in a nice position to capitalize.
Recently, Richard Mason wrote an article about Howard Weil 2012. The article titled "Operators Hint at Two New Liquids Plays, Major Permian Discovery" is one more leg to Lynden's story. The apparent industry excitement about the Cline shale is generating a lot of buzz. Devon, Concho, EOG and Pioneer are all actively pursuing the Cline shale. "Pioneer and Concho are now suggesting that the prospective Wolfcamp (Cline) spans the entire Midland basin," the article states. (For those unfamiliar with the Cline shale, it exists just below the Wolfcamp shale zones. Some companies are grouping the shales together and calling them the Wolfcamp shale.)
Tim Leach, CEO of Concho Resources, commented that they have 45,000 net acres of new holdings and their primary target is the Cline shale. "The punchline here is we think this play in the northern part of the Midland Basin will be very similar in returns and composition to the Wolfcamp in the southern part of the Midland Basin."
A couple of additional comments from the article. "Long story short: the horizontal Wolfcamp is on the verge of a substantial breakout in the Permian Bains." Also, Scott Sheffield, CEO of Pioneer, states "People... will will have to buy out smaller independents. It will be really tough to get a large acreage position because most land is held by production by the various operators." Again, Lynden is in an excellent position, because of their 103,400 acre Mitchell Ranch project. The next few months will be very interesting...
Thursday, March 15, 2012
Pioneer Article on West Texas Shale
An interesting article was written yesterday regarding the West Texas shale. Titled "Pioneer Bets on West Texas Shale Oil to Rival Bakken", this article speaks highly of the Wolfcamp Shale. "Everybody is going to be making a beeline to the Wolfcamp," said Scott Sheffield, CEO of Pioneer Natural Resources.
The Bakken formation in North Dakota and Montana is well known but the Wolfcamp could be the next big U.S. play. The Wolfcamp is potentially the thickest onshore U.S. oil shale play with some areas having over 1,000 feet of pay. Pioneer, Devon, Apache, EOG, Chesapeake, Approach, Range and Concho are among those active in the Midland Basin.
Lynden Energy Corp., although small relative to the companies mentioned above, has a large position on the eastern shelf of the Midland Basin. Their Mitchell Ranch project includes over 103,400 contiguous acres. They have a 50% interest in 68,400 net acres and 1.25% royalty over 35,000 acres that were farmed out to Chesapeake Energy. They have already had success with their Spade 17-1 well there and we believe it's only a matter of time before one of the majors comes knocking at their door. Once the market realizes this, LVL's undervalued share price can only go up!
The Bakken formation in North Dakota and Montana is well known but the Wolfcamp could be the next big U.S. play. The Wolfcamp is potentially the thickest onshore U.S. oil shale play with some areas having over 1,000 feet of pay. Pioneer, Devon, Apache, EOG, Chesapeake, Approach, Range and Concho are among those active in the Midland Basin.
Lynden Energy Corp., although small relative to the companies mentioned above, has a large position on the eastern shelf of the Midland Basin. Their Mitchell Ranch project includes over 103,400 contiguous acres. They have a 50% interest in 68,400 net acres and 1.25% royalty over 35,000 acres that were farmed out to Chesapeake Energy. They have already had success with their Spade 17-1 well there and we believe it's only a matter of time before one of the majors comes knocking at their door. Once the market realizes this, LVL's undervalued share price can only go up!
Thursday, March 1, 2012
Lynden releases MD&A
Lynden released its MD&A for the six month period ending 12/31/11. It appears that Lynden Energy Corp. has made production increases over the last month or so. Stated average production as of 12/31/11 was 471 boepd before royalties. The company's production exceeded 500 boepd after royalties for several days in January and February meaning their before royalties share of actual daily production was around 650 boepd. Production is finally catching up to Lynden's drilling activity as several wells that were completed are now being tied into sales. We expect production to increase further as additional completed wells are tied in.
Industry activity seems to be heating up in the areas where Lynden is active. Devon is active in the Wolfcamp west of Lynden's Mitchell Ranch and Apache is working on lands adjacent to the Wind Farms acreage. As acquisition activity increases, Lynden should be in an excellent position to capitalize given their quality acreage.
Industry activity seems to be heating up in the areas where Lynden is active. Devon is active in the Wolfcamp west of Lynden's Mitchell Ranch and Apache is working on lands adjacent to the Wind Farms acreage. As acquisition activity increases, Lynden should be in an excellent position to capitalize given their quality acreage.
Saturday, February 11, 2012
Energen to acquire Wolfberry property
Energen announced that they plan to acquire 3,200 Wolfberry acres for $65.8 million on Friday. They are acquiring the acreage from a private seller. The metrics for this deal equate to $20,300/acre.
With all of the recent Wolfberry sales, we believe that it's only time before the market realizes the value of Lynden Energy Corp.'s Wolfberry land. See our previous post for our valuations based upon Lynden's acreage.
With all of the recent Wolfberry sales, we believe that it's only time before the market realizes the value of Lynden Energy Corp.'s Wolfberry land. See our previous post for our valuations based upon Lynden's acreage.
Sunday, February 5, 2012
Lynden Update and Valuation
Lynden Energy Corp. has shown steady volume and an increase in their stock price culminating with a spike at the end of the day on Friday since news was released on their first Tubb well. Success at Tubb has the ability to add considerable value to Lynden's reserves and market cap. We have run an acreage valuation to demonstrate the huge upside potential in Lynden.
The current market cap of $45 million puts an average value of $1,112/acre over Lynden's West Martin, Wind Farms, Tubb and Mitchell Ranch land. Assigning no value for Mitchell Ranch still values Lynden's Wolfberry acreage at only $7,132/acre. Given that good Wolfberry land is selling for up to $35,000/acre and the developing land rush for acreage near Mitchell Ranch, we can calculate the tremendous upside in Lynden. Looking at these valuations shows the huge potential in Lynden!
Acreage Low Mid High
West Martin/WF 3,841 $20k/acre $27.5k/acre $35k/acre
Tubb 2,469 $10k/acre $20k/acre $25k/acre
Mitchell Ranch 34,150 $2k/acre $5k/acre $10k/acre
Total $170 M $326 M $538 M
Our low analysis shows a market cap 3.8 times the current market cap. Our mid and high show 7.4 times and 12.0 times the current market cap. Tubb's success gives Lynden a very real chance of seeing these increases in the market cap and we believe that once this company becomes better known by the market, Lynden has a chance to achieve these valuations!
The current market cap of $45 million puts an average value of $1,112/acre over Lynden's West Martin, Wind Farms, Tubb and Mitchell Ranch land. Assigning no value for Mitchell Ranch still values Lynden's Wolfberry acreage at only $7,132/acre. Given that good Wolfberry land is selling for up to $35,000/acre and the developing land rush for acreage near Mitchell Ranch, we can calculate the tremendous upside in Lynden. Looking at these valuations shows the huge potential in Lynden!
Acreage Low Mid High
West Martin/WF 3,841 $20k/acre $27.5k/acre $35k/acre
Tubb 2,469 $10k/acre $20k/acre $25k/acre
Mitchell Ranch 34,150 $2k/acre $5k/acre $10k/acre
Total $170 M $326 M $538 M
Our low analysis shows a market cap 3.8 times the current market cap. Our mid and high show 7.4 times and 12.0 times the current market cap. Tubb's success gives Lynden a very real chance of seeing these increases in the market cap and we believe that once this company becomes better known by the market, Lynden has a chance to achieve these valuations!
Subscribe to:
Posts (Atom)
