so why mad sp dropped so much today?, page-53

Firstly,

Paul your calculations assume that the exact flow per well is evenly distributed among the 600BOPD. This is a bad assumption.

You are also assuming that decline rates are the same, per well. This is a bad assumption.

If you did any research and went onto the texas RRC website, you would quickly see that this is not the case.

Secondly,

This is not a production play right now. 600million MC is made up of reserves, the same as a company like SYR has a market cap of 300million purely based on a couple of graphite drills. Or SIR has 180mil purely on 3 drills which showed a couple of metres of nickel copper.

Its about potential. These reserves have been calculated using the Australian and International (you will find australia actually ripped its off the PetroChem american standard anyway) standards which mean that ALL reserve calculations generally apply the same assumption.

If you knew what you were talking about, this would be clear, there is a good reason for this: It provides a like for like analysis.

You can try and tear down the competence of the engineer, but if he is using the same standards, the same assumptions and hes qualified he will get the same result. Not to mention, all calculations have to be submitted and checked anyway.

Finally, MAD isn't very very lucky, if you read anything about the company, they have been a contract drilling company in houston for 40 years. They acquired the land because the previous owners thought it was drilled out (which it was down to a specific level). Maverick management had access to their seismic data as the contract driller prior to ever buying the land, thus they had an idea that it might produce more oil with newer drilling techniques and different drilling zones (salt over-hangs rather than the salt cap itself).

Idoubt they will need reserve based lending as they just raised 50mil cash, had a profit of 6mil cash last year and still have a fair chunk of the 20mil raised early 2012.

50mil+cash is quite a drilling program espeically when you only pay labour (because you own the rigs)....

But hey, think what you like mate, this isn't ramping, my sources are:

Texas RRC website - Production query - driller code 534225

Maverick prospectus - history and assets