Wow! Lynden Energy signs agreement to sell 630 net acres for $25 milllion

Lynden Energy Corp. entered into an agreement to sell 630 net acres for $25 million to BreitBurn Energy Partners today.  This equates to $40,000/acre!!!  Given that 630 net acres is less than 10% of Lynden's Wolfberry project holdings, this is a tremendous deal for Lynden and validates the acreage valuations that have been used in previous posts.  More to come later.

Lynden Energy/Mitchell Ranch are in the heart of the Cline Shale!

The Cline Shale has been called "one of the most under-appreciated plays in the U.S." and possibly "one of the largest oil plays in American history."  If this turns out to be true, Lynden Energy Corp. could be sitting on one extremely valuable piece of property.  Devon and Firewheel are drilling wells all around Lynden's Mitchell Ranch. 

Back in April, we wrote about "How to Play the Cline."  Given Lynden's holdings in the core Wolfberry and the activity by Cobra, Trilogy, Target, Apache, etc. in the vicinity, we believe that their Mitchell Ranch project value is not reflected in their stock price.  With the latest excitement about the Cline Shale, Lynden's Mitchell Ranch could possibly be valued significantly higher than $5k/acre in the future.  Could that value be $10k, $15k, $20k/acre or higher?  Only time will tell.

Lynden's holdings include 6,730 net acres in the Wolfberry project and 34,150 net acres at Mitchell Ranch.  This appears to be a classic case where the sum of the parts is greater than the whole.  Both Mitchell Ranch and their Wolfberry projects separately could be valued higher than the current market cap.  Just as the Cline Shale is one of the most under-appreciated plays, Lynden is one of the most under-appreciated stocks should they ever be able to monetize their assets.

Devon permits three wells on the northern border of Mitchell Ranch

The Oil and Gas Investments Bulletin stated that "Devon Energy is now licensing a well very near the northern border of Mitchell Ranch."  They have in fact permitted THREE wells about one mile north of Lynden Energy's portion of Mitchell Ranch and two more in close proximity.  We have shown the five Devon wells and two Firewheel wells on a map in relation to Mitchell Ranch.

Does Devon have the Mitchell Ranch in their sights or is it a mere coincidence that the wells are that close?  Either way, the wells are a good sign and the results will go a long way toward showing the producte capability of the area without further expenditures by Lynden.

Mitchell Ranch is indeed in the hotbed of permitting activity in the newly discovered Cline Shale!  Very exciting for Lynden!!! 

Oil and Gas Investments Bulletin update on Lynden

Keith Schaefer from the Oil and Gas Investments Bulletin posted an update on Lynden Energy today.  He states that Lynden is open to both a corporate deal and selling off assets.  We believe that monetizing the Wolfberry assets would be worth potentially $200 million (LVL's current market is cap is about $100 million) and Schaefer states that that would be a realistic transaction price.

Schaefer also states that a private company has hit a 1,000+ bopd well just a few miles south of Mitchell Ranch.  We believe that he is referring to one of the Firewheel/Oxy wells, either the Horwood #2151H or the H&H Ranch #41 well.  There is a lot of permitting activity surrounding the Mitchell Ranch area due to the abundant interest in the Cline Shale.  We believe that Schaefer's estimate of value for Lynden's Mitchell Ranch of $2,000 to $3,000/acre is low.  A valuation of $7,500 to $10,000/acre is entirely possible in the near future which could add $250 to $350 million of value.  We believe that exciting times are ahead for Lynden!

JVL Advisors purchases another 1,044,000 shares

JVL Advisors purchased another 1,044,000 shares on 11/26 and 11/27.  This brings their total holdings to 15,051,100 shares!  JVL purchased 7,143,000 shares through a private placement and have now purchased an additional 7,908,100 shares in the market.  The purchases in the market have been above the price of the warrants which is certainly an encouraging sign.

More evidence of a Cline Shale boom

Lubbock-Avalanche Journal posted an interesting article on the Cline Shale.  The article states that the Cline Shale "is anticipated to be one of the largest oil plays in American history!"  Here is the link: http://lubbockonline.com/business/2012-11-28/exploration-continues-fuel-expectations-cline-shale-oil-boom

John Lovoi keeps buying Lynden Energy

John Lovoi continues to purchase shares of Lynden Energy Corp.  He now controls 14,007,100 shares as of 11/26/12.  It appears that another 1 million shares traded today in one transaction and could possibly be another insider purchase.  Given the recent activity around Mitchell Ranch by Firewheel Energy and around the Tubb area by various companies drilling in the Fusselman, Lynden's land is becoming more and more desirable.  Obviously, JVL Advisors is a believer. 

Here is an updated acreage/valuation analysis that shows the huge potential for Lynden!


                             Acreage       Low               Mid              High
West Martin/WF     4,108         $20k/acre       $27.5k/acre  $35k/acre
Tubb                      2,401         $30k/acre       $35k/acre     $40k/acre
Mitchell Ranch       34,150        $5k/acre         $7.5k/acre    $10k/acre

Total                                       $325 M             $453 M         $581 M

John Lovoi has extensive experience in research covering the oil industry as head of Morgan Stanley's Global Oil and Gas investment banking practice.  By these calculations, Lynden is worth several times its current market cap and could be worth $2 to $4/share.  Thhis may be the reason why John Lovoi is buying is such large quantities.