Re: MAD - Maverick Drilling & Exploration
Good article from EnergyNewsPremium.net:
Who is the tall dark stranger there?
The comparisons between Maverick Drilling &
Exploration and Aurora Oil & Gas have ratcheted up as
fast as Maverick was able to provide the market with
reserves estimates for its holdings in Texas.
Its latest update had its proven reserves doubled to
102 million barrels of oil based on an initial reserves
study at its Boling Dome Holdings. The news sent
Maverick shares north, just over 20% to $1.34.
While the rise has been somewhat pegged back, it is
part of a broader trend for Maverick as investors on
the ASX start sitting up and taking notice of the
junior.
Its shares have gone up nearly 418% since the start
of the year, sparking lamentations among the lateadopters
and cork-popping from those who held
shares in 2011.
To be fair, there was little indication in 2011 that
Maverick’s share price would undergo such an
explosion. For most of 2011, it was content to snap up
more acreage around its projects while poking around
for some early cash flow.
However, in 2012 it has started getting the numbers
from independent assessors, and since then the
market has been forced to sit up and take notice.
Investors have long sat up and taken notice of Aurora
Oil and Gas too, and with good reason. Its position in
the Eagle Ford shale is the envy of many an operator
in the region. Its faith in its Sugarloaf acreage has
been confirmed by two separate transactions.
The first being a 6% interest grab from a nonoperator
for $US95m, and it is in the middle of
acquiring a 6.25% stake from Eureka Energy via a
$A107m takeover bid.
Its acreage coupled with a no-fuss approach to getting
assets into production, along with the interest of
Marathon Oil in developing Aurora’s acreage has
helped grow its share price nearly 300% over the past
two years, with the growth even more astronomical
when taking in a longer time frame.
Again, those who got on early would be buying
Faberge eggs for breakfast.
Here is the scary thing though. A quick look at both
Aurora’s reserves position and Maverick’s reserves
position suggests there is a lot of upside in the market
to come from Maverick.
Aurora’s proven reserves sit at 80 million barrels of oil
equivalent pre-royalty and its proven and probable
reserves are 92MMboe.
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EnergyNewsPremium.net - Who is the tall dark stranger there?
By all accounts, that is a pretty decent haul.
After the latest reserves upgrade, Maverick is sitting at
102 million barrels of oil on 1P and 192MMbbls on 2P.
Aside from the cursory “one number is bigger than the
other” analysis, the astute will notice that Aurora’s
reserves are in Boe while Mavericks reserves are in
Bbl. With gas prices feeling the pinch in North
America, crude is very much king.
Aside from being focused on crude, Maverick has
managed to finagle a price for its crude of $18 above
West Texas Intermediate pricing.
While Maverick management do not invite the
comparison with Aurora, labelling Aurora a totally
different play to Maverick, the market cannot help
make matching the two based on the numbers.
While management could not comment specifically on
the validity of its market valuation, the company told
EnergyNewsPremium from Houston that it feels it is on
the beginning of a long path to its true valuation.
It added that it was sure analysts were crunching the
numbers to issue re-ratings in the near future.
Maverick also played a straight bat to suggestions the
recent reserves upgrades could have other players in
the area interested.
“Yes – we have had inquiries and tyre kicking from
several parts of the world but nothing material at this
point,” Maverick executive director Brad Simmons
said.
“We have a long way to go to really be thinking about
being a takeover candidate – and we don’t need any
partners to develop our fields.”
If the tyre kicking is not frenzied now, forthcoming
reserves evaluations for 3500 acres at Boling Dome,
1930 acres at Blue Ridge and a potential 4685 acres
at Nash Dome may just pique more curiosity.
As Simmons says though, Maverick does not need
anybody along for the ride to develop its fields.
It has a 100% stake in three producing fields. It has
spent time proving them up to provide data for
reserves estimates. It has 14 rigs it is preparing for
further drilling, four of which will be out and drilling in
the fields in short order.
This in turn will drive production upward of its
757bopd and provide cash flow.
The real question for Maverick is how much time it will
take to fully exploit its plentiful resource.
While it is not a bad dilemma to have, it is one that
could detract from the love Maverick has been feeling
lately.
Detractors have pointed out that Maverick’s producers
so far have been on the “piddly” end of the scale. In
fact, a number of its wells have stabilised in the 10 to
20bopd range.
Those sorts of production numbers don’t exactly excite
shareholders or the broader market, but Maverick
insists that it has higher producing zones to tap if
needed.
But surely if it could produce from the higher zones
then it would, or so the logic goes.
The company has told investors that it is able to
break even at 10bopd, but those who have jumped on
board the MAD bandwagon would like to see the
company do better than just break even.
Past comments from directors in Simmons and Don
Henrich point to why the company has limited
production, and as far as excuses go for limiting
production thus far go, it is a pretty good one.
In an April Interview with Motley Fool Share Advisor
the pair elaborated on why they may just want to
keep a lid on things.
“As some MAD followers have now realised, premature
release of positive information creates the prospect of
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EnergyNewsPremium.net - Who is the tall dark stranger there?
http://www.energynewspremium.net/StoryView.asp?StoryID=8685601[6/20/2012 11:15:01 PM]
‘shooting yourself in the foot’ in terms of acquiring the
offset acreage in the vicinity,” they said.
“We are pleased with the results of those wells, and
for now we leave it at that.”
So while Aurora Oil & Gas will be taking part in the
frenzied drilling campaign of Marathon Oil, and more
than likely growing its production figures at a rate of
knots Maverick will be more of a slow-burner.
With acreage all around Texas hotter than Texas in
July, Maverick’s game is to not add to the inflationary
pressure of the market by producing a bucket-load of
oil, and hopefully building a massive acreage position
for the best possible price.
“We hear facetious comments about Maverick’s ‘200
years of drilling’ ahead at the pace we are drilling
now,” Simmons and Henrich said.
“We don’t think Exxon or BHP loses any sleep about
having decades or more of drilling ahead. The ones
who should be losing sleep are those who do not have
decades or moe of drilling ahead.”
It figures that by going slow and steady, it may win
the race.
Source: ENP