maverick valuation and evolution

Given the amount of money I have invested in MAD which is much less than Davo22 and many others here (due to my late entry), I have attempted to get a better feel for what MAD is really worth - both now and into the future when they achieve certain milestones.

I do think the best comparison is with Aurora (AUT) given its very similar business model and location. In fact, this is also a conservative comparison given that Maverick's extraction costs are lower per barrel, and their sell price is higher per barrel.

See attached;

Currently AUT is valued at 3 times more than MAD. I can't argue with the AUT production profile which will move from close to 5,000 BOPD to around 18,000 BOPD by end 2012. Impressive in anyones language. AUT reserves are not too dissimilar to MAD's current reserves.

Looking back at the evolution of AUT, it's not hard to see the similarities between what they have achieved, and what MAD are starting to achieve. IMO, MAD are about 12-18 months behind AUT in it's evolution. MAD have built reserves more quickly than AUT, but need to catch up on production which is clearly a goal of MAD management in 2nd half 2012.

AUT was valued at $850 - $900 million MC at the end of 2010. This was based on reserves of 1P 14m, 2P 30m and around 1,000 BOPD. I see MAD as being further ahead than AUT was at that point - we are slightly lower production but much higher in reserves. So from an investment point of view, I believe at $550m MC, MAD is currently undervalued by about 50-60%. I.e. right now I believe we should be in the low $2's/share region.

And with all the news coming in the next few months regarding reserves and new acreage, all we will need later this year and in 2013 will be a ramp up in drilling and production. The scene will be set for multiples of the current SP if management can achieve their goals.

New wells with higher flow rates will be key to enable production to grow rapidly. And one gets the feeling that those higher flow rate wells (such as Grace#182 perhaps?)are just around the corner.

Note: some of the numbers in the spreadsheet may not be exact, or may be my incorrect interpretation from my readings.

Good luck to holders. MAD is definitely one for the bottom drawer. I have locked that drawer for some time to come.