oil and gas plays: josh young

Profit with Undiscovered Oil and Gas Plays: Josh Young
BY THE ENERGY REPORT, ON MARCH 15TH, 2012 IN ENERGY

JY: Molopo Energy Ltd. (MPO:ASX) is another company I’ve talked about before. The stock is still stuck in a morass, despite an exciting deal in the works. Its CEO has been telling investors that he expects an ongoing asset sale process that the company has been involved with in Queensland, Australia to close in March. There are a number of reasons to expect a high sale value for the Australian asset. The price of liquid natural gas (LNG) in Japan, which is the primary market for Australian natural gas, has seen prices as high as $18 and $20 per thousand cubic feet (mcf). A nearby competitor in Queensland recently announced an offer that would imply a very high value for Molopo’s assets—as much as $150–200M. I don’t expect the assets to sell for quite that much, but could come in at a higher price than people expected.

TER: Where is that stock trading these days?

JY: Molopo trades around $0.70, with a market cap of around $150M. The company has $100M in cash, no debt and is currently producing net around 500 bbl/day. Combining the current production value plus its cash, you get everything else for free. It could easily sell the Queensland asset for $80M, plus it has development locations across 20,000 net acres in the Permian basin and a potential Bakken play on 50,000 net acres in southeast Saskatchewan. Analysts covering the stock estimate its value at $1.00-1.50.

http://jutiagroup.com/20120315-profit-with-undiscovered-oil-and-gas-plays-josh-young/