Wednesday, June 22, 2011

Laredo to buy Broad Oak for $1 billion

Laredo Petroleum LLC announced today that it is buying Broad Oak Energy for $1 billion. Broad Oak holds about 65,000 acres in the Wolberry trend and produces about 5,000 bo/day. This transaction equates to over $15,000/acre.

Tuesday, June 14, 2011

Lynden posts updated Inverstor Presentation

Lynden Energy Corp. has posted a new Investor Presentation on their website. A couple highlights:

1. Wolfberry project now includes 5,985 net acres with 250 BOE/day and estimated production of 450 to 500 BOE/day by the end of 2011.

2. Lynden has 9 gross producing Wolfberry wells and 7 that have been spud or awaiting completion. They have a 43.75% working interest in all but one of those wells. They anticipate 23 gross producing wells and 5 spud by the end of 2011.

3. "Repeatable nature of Wolfberry allows for conservative use of debt financing." This would reduce the need to issue more stock preventing further dilution.

4. Developing "Land Rush" throughout the Eastern Shelf of the Permian Basin with the Mississippian as the primary driver. The Mississippian is being developed in Eastern Oklahoma on similar rock packages as exists at Mitchell Ranch by Chesapeake, Eagle Energy, Sandridge and Range Resources.

Wednesday, June 8, 2011

Lynden Energy Corp.

By our analysis based on the recent news release and articles by Canaccord Genuity and Keith Schaefer, Lynden Energy is significantly undervalued. The $0.50 current share price values the company at a $50 million market cap. The stock price should be trading much higher given the facts.

Here’s another way to look at Lynden’s assets: Canaccord Genuity’s Daily Letter assumes an average recovery of 190,000 barrels per well and 180 net drilling locations. This correlates well with 40 acre spacing and 6,000 net acres (150 net well locations). This equals 30 million barrels of oil ultimately recoverable. Using an industry standard potential transaction metric of $17/barrel if this oil were proven, Lynden’s Wolfberry could be worth over $500 million. If these are just probable/possible reserves, then they could be valued at $5/barrel. Even at $5/barrel, LVL’s 30 million barrels of oil are worth $150 million.

The Daily Letter further states that Lynden expects their Harrell 34 #1 well to ultimately recover 408,000 barrels of oil due to drilling down to the Mississippian limestone and production from the Atoka interval. Lynden and CrownQuest have shown to be innovative in their drilling approach by deepening their wells and are achieving some of the best results in the industry. Lynden’s association with CrownQuest gives them vast experience in the Wolfberry as CrownQuest has successfully drilled over 180 Wolfberry wells to date.

Recent Wolfberry land transactions have been reported to be anywhere from $20,000/acre to $40,000/acre. With $20,000/acre and 6,000 net acres, their land could be worth $120 million. This valuation provides another metric that validates Lynden’s potential.

Lynden’s Wolfberry land is in areas that are surrounded by proven Wolfberry wells. It appears that with the success they’ve had with their Wolfberry wells, their Wolfberry land is relatively low risk. This is evidenced by the Cawley reserve report released last year which stated that Lynden had 8.25 million barrels of proved plus probable reserves and this report covered only a portion of their Wolfberry lands.

Given the recent release of initial results from their Mitchell Ranch Spade 17 #1 well, there is now some valid evidence that this area could have productive Wolfcamp wells. With over 50,000 net acres in that area, even a valuation as low as $2,000/acre (the recent March University Land Sale netted an average of $2,400/acre demonstrating the confidence that Permian Basin oil and gas operators have in the basin) result in an additional value of $100 million for Lynden. With additional success at Mitchell Ranch, the stock price could be multiples of what it is currently trading at.

Given Lynden’s existing production in the low risk Wolfberry and the potential for the Mitchell Ranch lands to add SIGNIFICANT value, Lynden has a lot of value that is not currently recognized by the market. This is a great story and it’s only a matter of time before the market takes notice.

Monday, June 6, 2011

Lynden Energy releases encouraging results fom Mitchell Ranch Spade 17 #1 well

Lynden Energy Corp. today announced "significant results from an uphole Wolfcamp completion in the Spade 17 #1 well on the Mitchell Ranch Project." In the last eight days since oil production began, the well has averaged 84 barrels of oil from only the upper zone interval. This is SIGNIFICANT news in that the Mitchell Ranch is largely an unproven area and 84 barrels far exceeds expectations. Should these results be confirmed by additional wells, Lynden's 50% share of the over 100,000 acre Mitchell Ranch could be worth several hundred million dollars (i.e. 50,000 acres x $10,000/acre = $500 million!)

"Management is extremely encouraged by the intial production volumes from this recent completion." The well is still unloading frac water and further improvement in IP rates could still occur.

Currently, at a stock price of $0.48/share, it appears that the only value recognized by the market is a portion of Lynden's Wolfberry assets. We believe that the Wolfberry assets alone are worth over $1.00/share. Once value for the Mitchell Ranch is realized, Lynden's stock price could be (and should be) several times what it is currently trading at!

This news is the type of news that won't go unnoticed, even for a company as unknown as Lynden. We expect Lynden to start attracting much more market attention with this news. Lynden presented at the recent Permian Basin Field Trip held by Canaccord Genuity further demonstrating that people are starting to pay attention to this company.

Lynden Energy stock trading halted

Lynden Energy's stock has been halted today pending news release.