Bolter has experience in Canada. Zapata had heavy oil production and that's why they like Dina at Provost. They expect to drill their 10 well program pretty quick and cheap. Wells cost about 750K and they expect to have 350bpd production by late this year. Should give them positive cashflow and help finance other initiatives.
I like the two transactions so far. The $8million sale was isolated land and gives Mako cash to move ahead with their still large land package. The $20million was a good credibility boost. They sold to a new, well capitalized company, Black Swan, that had lots of cash but no land to drill. The principals are apparently former Talisman execs with good reputations so they were able to raise money just on their reputations, without land holdings. Black Swan will do two things. Mako will get carried on two wells, which will hopefully help establish the area as productive and give Mako some cashflow from their 10% WI with no cash risk. Since Black Swan is public, there should be no problem with them disclosing their drill results. Some of the players in the Duvernay are private and still won't disclose production from drilled wells. So Mako should be able to put out PR's simultaneously with Black Swan.
This will highlight this particular section of their holdings but also encourage investors to investigate their big land package in the Duvernay as well as Rock Creek.
These two transactions have raised some cash for Mako but they will obviously need more to drill Rock Creek. They have assigned the existing cash to drill out Dina and get production and cashflow going quickly.
So hopefully Black Swan will be successful in their vertical and horizontal well in 2012. Add on Dina and Mako will be a cashflow positive producer seeking capital. These two events should raise the share price and minimize dilution.
They said they are looking for partners to drill Rock Creek. They would like to find a partner will and able to JV on a 75% cost to earn 50% WI. If they don't find a good partner, they intend to drill Rock Creek but that would mean some substantial dilution to raise enough to drill several wells at 100%WI. They intend to look in Canada as well as Australia for a partner.
They are going to list in Canada and have done the paperwork and hope to list in the next couple of months.
I am holding 3 Aussie energy stocks, SEA.ax, RFE.ax and AOK.ax. All have done well and I am hoping MKE will follow in their footsteps. There aren't as many investors in Canada as in the US but because there are so many energy companies in Canada, there are many knowledgeable investors. If the Duvernay and Rock Creek land held by Mako proves to be in the oil/liquids window, Mako should do well.
MKE Price at posting:
10.0¢ Sentiment: Buy Disclosure: Not Held
