Tuesday, February 26, 2013

Lynden is covered in an interview in The Energy Report

The Energy Report published an interview (click here for link) with Mat Wilson, an analyst with Pinetree Capital.  He is very bullish on Lynden.  Here is a portion of the interview:

TER: What's an example of a less risky asset?

MW: Two companies that are starting to see a solid de-risking to their asset base are the two that I'm most bullish on in 2013: Lynden Energy Corp. (LVL:TSX.V), which is operating in the Cline and Wolfcamp shales of West Texas, and Americas Petrogas Inc. (BOE:TSX.V) in Argentina.

Lynden is listed on the Toronto Venture Exchange, based in Vancouver, and exploring in Texas, which has kept the story relatively unknown to many investors despite its strong performance in 2012.

Lynden has exposure to more than 100,000 gross acres in the Wolfcamp and Cline shale formation in the Midland Basin of West Texas. We expect the company to report a 2012 exit production rate of about 1,000 barrels of oil equivalent per day (1,000 boe/d) from 7,000 net acres in the middle of the Wolfcamp basin. This land package and production underpins its current valuation of $100 million ($100M) as it recently sold 660 net acres for $25M.

What's more exciting here is that the company holds 50% of 68,000 gross acres in Mitchell County. This property is in the middle of Devon Energy Corp.'s (DVN:NYSE) 560,000-acre Cline shale package, which is only beginning to be explored.

Following the money, Sumitomo Metal Mining Co. Ltd. (STMNF:OTCPK) recently paid Devon $340M in cash and is committed to spend more than $1 billion ($1B) for just 30% of the ground in the basin. The majority of that is going to this Cline package, which Lynden's ground is right in the middle of.

Just south of this area, Sinochem International Corp. just paid Pioneer Natural Resources Co. (PXD:NYSE) $500M in cash and is spending $1.2B to drill 86 horizontal wells in the Wolfcamp. This is adding fuel to the fire in what is turning out to be one of the more exciting American domestic oil plays.

Lynden's plan for the year is to continue to push its Wolfcamp production and probably drill a well on its Mitchell property to prove the Cline shale extends through its ground.

TER: What was Lynden's production last year and what's its production guidance for this year?

MW: Lynden came into 2012 producing 300–400 boe/d and its guidance throughout the year was to exit 2012 with 1,000 boe/d. Lynden will be reporting soon and we expect its exit production to be in line with its guidance.

TER: What's the plan to expand that production in 2013?

MW: These are not very expensive wells, so Lynden will continue to rely on its $30M borrowing base to expand production as it has been doing for the last year.

TER: It sold roughly $25M worth of acreage. What are the plans for that cash?

MW: That cash brought down the borrowing base to essentially zero to allow the company to continue pushing forward on its production expansion.

Links to Cline Shale articles

An article in the Times Record News (click here for link) says, "The latest hot spot in oil exploration is the Cline Shale play in West Texas." 

Fuelfix.com posted a new article (click here) and here a few quotes from that article:

Benjamin Shattuck, an analyst with Wood Mackenzie in Houston, said just 80 to 100 wells have been drilled in the Cline, and data is sketchy so far. He expects the industry in six months will have twice as much information on Cline Shale as it does now.

“Operators are doing their best to keep the result confidential,” he said. “The big thing in the Cline is that results so far have been good.”

Apparently, it seems like Cline shale results from Devon and others are being held confidential.  Hopefully, results will filter to the market soon.  A good sign, though, is that several companies are continuing to drill wells and buy Cline land.

Wednesday, February 20, 2013

Devon Energy Conference Call mentions Cline Shale

Devon Energy's conference call this morning made mention of the Cline Shale.  Here is a quote from the transcript on Seeking Alpha from Devon's CEO:

"If you look at total resource potential, then certainly the Cline Shale and the Wolfcamp Shale would rank at the top of the list.  And as we really drive the economic value as we move forward in the Cline Shale, it could be very, very significant."

Keep in mind that Devon is drilling in the Cline Shale in Mitchell County very near the north border of Lynden Energy's Mitchell Ranch.  In fact, three of Devon's wells are within a mile of the border.

Wednesday, February 13, 2013

Lynden Energy named to TSX Venture 50

Lynden Energy Corp. was named to the TSX Venture 50.  This is a ranking "reserved for the strongest performing compnies on the TSX Venture Exchange." 

Colin Watt, LVL CEO states, "This is an honor for Lynden to be included among the industry top performers as part of the TSX Venture 50.  This achievement is further confirmation of the impressive growth we have realized not only in our share value but also in the market's recognition of our company."

Monday, February 11, 2013

Cline shale article posted on Lubbock Online

There was an informative article posted on Lubbock Online, click here for link.  Lynden Energy is mentioned toward the end of the article.

Also, Lynden Energy was mentioned as one of the top Canadian companies with foreign direct investment in a release by the state of Texas (click here to view).

Thursday, February 7, 2013

Good mention about Lynden Energy

There is an interview in the Energy Report with Keith Schaefer from the Oil and Gas Investments Bulletin that mentions Lynden Energy Corp. (click here for link from the Before It's News website).  Towards the end of the interview (you may have to view it on the 2nd page), Schaefer mentions that LVL is "a really interesting story."  He states the following:

1. Mitchell Ranch is a big land package that is very rare because it is one contiguous block.

2. If Mitchell Ranch were to be spun out and IPO'd, it could "probably get $250 million for it, worth $2.50/share).

3. Lynden raised its own money and therefore, doesn't get a lot of research from the Street, "It's a bit of an undiscovered gem."

4. Lynden's Wolfberry production "justifies the price of the stock on its own, so you're basically getting Mitchell Ranch for free."  (Note, see our 10/31/11 analysis where we discuss buying an oil field for free, much of that analysis still applies.)

Monday, February 4, 2013

Interesting article on Cline Shale

The Oil and Gas Journal has an interesting article on the Cline Shale (click here to view).  Mitchell County and Sterling County are right in the center of the Cline Shale area as shown on the map in the article meaning Lynden Energy's Mitchell Ranch is also in the heart of the Cline Shale area.