Written yesterday, very relevant today....This company is...

Written yesterday, very relevant today....

This company is seriously flying under the radar, it has massive reserves, is cash flow positive and is delivering over and above expectations.
With a market cap sub $110mil (fully diluted) it is being treated as a penny dreadful but really it deserves to be trading at a premium based on the performance to date. A reserve/market cap comparison with other oil and gas companys is very interesting.

After the big 5 AGK ORG OSH STO WPL (all above $6bil mkt cap) it looks as though MAD would have the next biggest 2p in ground value of oil at 72mmbo net. The BOE quoted below can include small or large amounts of gas. Gas generally falls between $15-50boe depending on location as opposed to around $110 MAD would be recieving for its oil. I believe MAD does have some gas behind pipe but does not include it in its reserves.

Not sure whether the below reserve figures are net or gross as many of the companys are not very transparent with the reserve figures. The reserves were taken/estimated from the latest investor presentations. Also many of them have varying amounts of options on issue that will cap the upside, MAD has none!!!
AUT Mkt cap $1.3bil has approx net 40mmbo + 120bcf of gas (gas $value equivalent sub 3mmbo) $21boe ($30bo)
AWE $690m, 66mmboe (mostly gas) $10.50boe
BPT $1.5bill, 77mmboe (mostly gas) $19.50boe
SXY $860mil 20mmboe (mostly gas) $43boe
The next level
HZN $243mil 17mmbo $14boe
NZO $220mil 4mmbo? $55boe
ROC $201mil 16mmboe $12.50boe
COE $109mil 2.5mmboe $43boe ...
CUE $156mil 3mmbo 120bcf (20milboe. $value likely around 6milbo) $6.80boe ($17.30bo)
HOG $50mil 40bcf ($6.7mboe. $val approx $2mbo) $7.50boe ($25bo)
NDO $47mil 1mmbo? $47boe?
OEL $107mil 1.4mmbo $76.50boe
TAP $147mil 8.3mmbo $17.70boe
MAD $110mil 72mmbo $1.50bo
At $12.50 roc (mostly oil) is the next cheapest on a reserves vs inground value at an 830% premium to MAD. It is likely that MAD will add an increase to reserves of 50-100%+ mid year , on average for the above companys it equates to decades and hundreds of millions to achieve those figures, but for MAD we are talking 18months and tens of millions..
So while the above companys revenue ranges from significantly higher to just higher the thing they have in common is the reserves constantly need replacing which most of the companys struggle to do which in turn explains the very high cash burn and the lack of oil figuring in reserves.

The oil and gas companys not mentioned have less revenue than MAD and most have little or no reserves.

Maverick have 3 drilling rigs dedicated full time to developing their assets, one that is to be used by other operators and are currently looking to add another rig. Wells take less than 2 weeks to drill so I would expect upwards of 100 wells drilled this year. So far wells have been restricted to an average 25bopd, it is interesting to note that production has jumped to 1000bopd from 700 in november. Based on their bussiness model I expect they need to a purchase quite a few more rigs. and could well be producing over 2500bopd by the end of the year
The salt overhang a new discovery is not currently factored into reserves and is awaiting seismic before proceeding with development, this could provide a real kick to both production and reserves when it is developed.

With preliminary reserves for boling dome and Nash due mid year we should have upwards of 100mmbo of 2p reserves. At some point investors cant continue to ignore the massive reserves. I would not be at all surprised to see another company increase their reserves indirectly through buying a stake in MAD which would prove significantly cheaper for them than increasing reserves through the drill bit..
Considering the massive development required for the 3 salt domes and the potential to acquire more it may be in MADs best interest to sell blue ridge in the next 12months-2 years, even at the low price of $5 bo 2p that would be worth $350mil leading to a significant capital return, the companys above cannot find oil at $5 a barrel so it would be a wise investment.
MAD management sound as though they rate Boling and Nash as equivalent quality to Blue ridge, if so based on the fairway acreage held that would equate an extra 280mmbo on top of the current 70, for a total of 350mmbo, sounds unlikely???, still it is more likely than the prospective figures most other companys in the oil and gas sector have splashed throughout their presentations and promotional material, which in most cases just end up as very expensive hole in the ground when they P+A, so think about that next time you read them. I never would have believed blue Ridge would have ended up with 72mmbo 2p. It is almost a dead certainty that Nash and Boling will be successful, how succesful is the question.

If MAD can increase its market cap up around $350mil ($5bo current 2p) (Strachan expects the shareprice to be over $1ps) it will enter the ASX300 which will open the door to more institutional and investor interest, if management can keep the current success going MAD is very likely to become a "Market Darling" over the next 6months which would add a significant premium (AUT is an example) potentially sending it up into the ASX200 ($700mil approx)
I believe there is a good chance MAD could rerate to around a 500mil mkt cap - $5bo 2p - $1.50per share this year. I hope to see an increase in the quality of investor presentations released by the company as they are very underwhelming compared to the story, I have mentioned it and will follow up at a later date.

MAD is my largest holding and I expect we could have an exciting 12months coming up....
Cheers