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.

JVL Advisors acquires common shares of Lynden!

It was announced today that JVL acquired an additional 3,389,100 shares of Lynden Energy from August 28 to September 11.  It is also apparent that JVL must have been involved in the recent financing.  JVL now owns 10,532,100 shares of Lynden!

JVL Advisors is a great team to partner up with.  A company like that would not buy into the private placement and continue to purchase shares in the open market without doing their due diligence and clearly they like what they see.  John Lovoi, the founder of JVL Advisors, previously served as Head of Morgan Stanley’s Global Oil and Gas investment banking practice.  With his experience in research and covering the oil industry, his due diligence must have concluded that Lynden is undervalued and worth backing.  We are extremely excited at the prospects of having JVL Advisors as a large Lynden shareholder. 

Under John Lovoi, Morgan Stanley was a leader in oil and gas investment banking and mergers and acquisitions.  He was “regarded as one of the most influential analysts in this sector and was well known for his stock picking capabilities.” For Lynden to be associated with JVL, this will undoubtedly open up many opportunities. 

We view Lynden’s prospects as extremely bright, especially with all of the interest in Wolfberry and Cline Shale land.  There are now open well permits in the vicinity of Mitchell Ranch and it appears the industry is testing wells in that area.  With support of JVL Advisors, we believe that Lynden can realize its market cap potential and that this stock can return multiples.

Couple of comments from Devon conference call

There were two interesting comments made during the Devon conference call today:

David Hager, Executive V.P. of E&P - "While it's in the very early stages of the evaluation of our position, we are very encouraged that the Cline Shale with be a highly economic oil play."

John Richels, CEO - "Current production is less than 500 bod that we'd be conveying."  This is regarding to current production on the JV acreage.

It appears that the lands conveyed to Sumitomo are basically undeveloped and they paid $7,200/acre for undeveloped Cline Shale land.  A portion of Devon's land is adjacent to Lynden Energy Corp.'s Mitchell Ranch and that may help explain today's runup in Lynden's stock price.

Devon Energy/Sumitomo $1.4 Billion JV in Cline Shale and Midland-Wolfcamp Shale

Devon Energy announced a $1.4 billion joint venture with Sumitomo Corporation.  Sumitomo will invest $1.4 billion in exchange for 30 percent of Devon's 650,000 acres in the Cline Shale and Midland-Wolfcamp Shale.  This deal is equivalent to $7,200/acre!

The deal is generating a lot of industry attention.  Wunderlich Securities expects to see more JV's in the Permian Basin as this deal is "the first block buster JV in the Midland Basin and we expect more to come". 

There is a lot of drilling activity in the Permian Basin and Lynden Energy has significant holdings in both the Wolfberry and Cline Shales.  Lynden's West Martin/Wind Farms project and Tubb project include 6,509 net Wolfberry acres and is now producing over 900 boe/d per the company's latest release.  The core area (West Martin/Wind Farms and Tubb) can be valued at $25,000/acre to $30,000/acre given the amount of current development valuing it at $150 million to $200 million.

Lynden's Mitchell Ranch acreage is in the heart of the Cline Shale, in fact Devlon has significant Cline holdings adjacent to it.  Should one value Lynden's 34,150 net Mitchell Ranch acres at $7,200/acre, LVL's market cap would soar! 

With the increased industry attention to the Permian Basin and the Cline Shale, it is likely that larger companies are either looking at Lynden or will be looking at Lynden.  Lynden is a unique company as it's one of the few small companies in the basin that has significant acreage.  Lynden is sitting on a great asset that is in the heart of the Permian activity and is in a great position to take advantage of the recent JV activity. 

Breitburn Energy Closes Permian Acquisition

BreitBurn Energy Partners L.P. closed on their Permian Basin Wolfberry acquisition.  The price per acre metric was $47,826/acre.  Of additional interest is that it was disclosed that CrownRock LP was the seller of one of the properties for $70 million.  CrownRock is the working interest partner in all of Lynden Energy's projects.