Zapata was a medium/heavy oil producer. They were recapitalized...

Zapata was a medium/heavy oil producer. They were recapitalized in 2010 and changed their name to Surge, SGY.to. They are currently at 641million market cap.

Basically, I got the impression that Dina isn't going to be an asset that will generate lots of investor enthusiasm but it will quickly and cheaply make Mako a producer and cashflow positive by mid/late 2012. They are talking 350bpd from the 10 well program. They have already earmarked $7million from the land sales for this program. I didn't hear anything about selling the asset. I think it's a cashflow machine that will help finance the bigger wells at Rock Creek. Even after it's producing, the heavy oil wells don't get much respect, in terms of sales value so I see the cashflow aspect as most important.

Once Mako is producing and cashflowing, they expect to be in a better position to issue shares at a higher price. There is no doubt they need to issue shares at some point. They might do a small offering when they start trading in Canada. There might be value in working with a Canadian broker to issue shares to their good clients at a good price to generate local investing interest.

Certainly Australian investors are not familiar with the Duvernay or Rock Creek formations. They are not as large nor as well known as the Bakken or Eagle Ford but could eventually turn into big plays. Certainly the billions spent recently on land sales in Alberta indicates that big players are grabbing land as quickly as they can.

In terms of the isolated sections in Mako's land holdings, Cam Bolter pointed out that they have carefully assembled land packages in smaller packages that eventually resulted in bigger, contiguous parcels. This policy has resulted in some isolated sections but has been their philosophy since they started assembling their land. Even those isolated sections could prove valuable if drillers holding nearby sections need longer extensions. By then, the land should be proven up and worth a lot more than Mako paid. Mako could choose to amalgamate the land with neighbors and hold a smaller WI% of a JV or just sell out for cash. Bolter also pointed out that a bigger player couldn't have assembled the package at the price Mako paid because once word got out that a billion dollar energy company was buying leases, the price would have gone up immediately. Mako's approach took longer to assemble but it is a significant holding, especially in comparison to their market cap.

Their goal is to let the bigger players prove up the Duvernay. This should happen in 2012 as Black Swan is scheduled to drill two wells on their 20%WI land by year end and other bigger players proceed on their numerous drill permits.

They didn't mention consolidating land and I didn't ask them if they were still actively leasing more land. I don't have a position yet in Mako but like many aspects of the company.

I am short on cash now because of taxes but will try to free up some cash and nibble away over the next few months. Maybe I'll even sell some Sundance, if it moves up a bit more.