Oil and gas producer that has been flying under the radar

OIL AND GAS PRODUCER THAT HAS BEEN FLYING UNDER THE RADAR


Investment managers with a strong track record of picking turnaround stories have provided favourable commentary around the fact that there may be a change in the fortunes of the energy sector in the near future.

“I think there are massive opportunities in energy.

“I just believe that the margin of safety for the globe is the smallest it’s ever been in energy. Global demand is 96 million barrels per day, the highest it’s ever been, and incremental supply capacity, let’s say swing capacity, is at the lowest point as a percentage of that ever, about a million and a half barrels a day
“Incrementally there is new demand for crude every year.

“We are going to go down 1 million barrels a day in the next twelve months and so we are going to go from a glut to a deficit and the world is not ready for a deficit.

If you are going to allocate capital for the next three to five years, you should do it within the next six months into the energy space.”
Kyle Bass, Hayman Capital (interview on Wall Street Week, January 3, 2016)

A junior ASX listed oil and gas producer has been investing its management capital wisely over the last two years to reposition itself to take advantage of the low oil price, and has increased its proved reserves by 400% as announced today.

This company, capped at less than A$8 million, acquired an oil and gas field in Wyoming in July 2015 and it was able to increase its production by more than 50% to 822 boepd (Q4-15).

The company’s reserves from the recently acquired Wyoming field along with profitable producing fields in Colorado and California, as announced today, have been independently certified to have an estimated PV10% value of US$19.3M (A$25.7M) based on an oil forward strip price starting at US$40.97/barrel and a gas forward strip price starting at US$2.49/mmbtu. The future net income undiscounted for the company's fields is US$33M.

This company has received a speculative buy recommendation from Stock Analysis and Strachan Corporate.

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