The comparisons between Maverick Drilling & Exploration and Aurora Oil & Gas have ratcheted up as fast as Maverick was able to provide the market with reserves estimates for its holdings in Texas. Its latest update had its proven reserves doubled to 102 million barrels of oil based on an initial reserves study at its Boling Dome Holdings. The news sent Maverick shares north, just over 20% to $1.34. While the rise has been somewhat pegged back, it is part of a broader trend for Maverick as investors on the ASX start sitting up and taking notice of the junior. Its shares have gone up nearly 418% since the start of the year, sparking lamentations among the lateadopters and cork-popping from those who held shares in 2011. To be fair, there was little indication in 2011 that Maverick’s share price would undergo such an explosion. For most of 2011, it was content to snap up more acreage around its projects while poking around for some early cash flow. However, in 2012 it has started getting the numbers from independent assessors, and since then the market has been forced to sit up and take notice. Investors have long sat up and taken notice of Aurora Oil and Gas too, and with good reason. Its position in the Eagle Ford shale is the envy of many an operator in the region. Its faith in its Sugarloaf acreage has been confirmed by two separate transactions. The first being a 6% interest grab from a nonoperator for $US95m, and it is in the middle of acquiring a 6.25% stake from Eureka Energy via a $A107m takeover bid. Its acreage coupled with a no-fuss approach to getting assets into production, along with the interest of Marathon Oil in developing Aurora’s acreage has helped grow its share price nearly 300% over the past two years, with the growth even more astronomical when taking in a longer time frame. Again, those who got on early would be buying Faberge eggs for breakfast. Here is the scary thing though. A quick look at both Aurora’s reserves position and Maverick’s reserves position suggests there is a lot of upside in the market to come from Maverick. Aurora’s proven reserves sit at 80 million barrels of oil equivalent pre-royalty and its proven and probable reserves are 92MMboe. STORY IMAGE SLIDESHOW Recently Discussed Companies and organisations covered during the past 30 days - more Company Search Industry Story Search Section Commodity Region Feature Advanced Search Industry Search Wells Reports 20-Jun-2012 13-Jun-2012 6-Jun-2012 30-May-2012 23-May-2012 more Industry News EnergyNewsPremium.net - Who is the tall dark stranger there?
By all accounts, that is a pretty decent haul. After the latest reserves upgrade, Maverick is sitting at 102 million barrels of oil on 1P and 192MMbbls on 2P. Aside from the cursory “one number is bigger than the other” analysis, the astute will notice that Aurora’s reserves are in Boe while Mavericks reserves are in Bbl. With gas prices feeling the pinch in North America, crude is very much king. Aside from being focused on crude, Maverick has managed to finagle a price for its crude of $18 above West Texas Intermediate pricing. While Maverick management do not invite the comparison with Aurora, labelling Aurora a totally different play to Maverick, the market cannot help make matching the two based on the numbers. While management could not comment specifically on the validity of its market valuation, the company told EnergyNewsPremium from Houston that it feels it is on the beginning of a long path to its true valuation. It added that it was sure analysts were crunching the numbers to issue re-ratings in the near future. Maverick also played a straight bat to suggestions the recent reserves upgrades could have other players in the area interested. “Yes – we have had inquiries and tyre kicking from several parts of the world but nothing material at this point,” Maverick executive director Brad Simmons said. “We have a long way to go to really be thinking about being a takeover candidate – and we don’t need any partners to develop our fields.” If the tyre kicking is not frenzied now, forthcoming reserves evaluations for 3500 acres at Boling Dome, 1930 acres at Blue Ridge and a potential 4685 acres at Nash Dome may just pique more curiosity. As Simmons says though, Maverick does not need anybody along for the ride to develop its fields. It has a 100% stake in three producing fields. It has spent time proving them up to provide data for reserves estimates. It has 14 rigs it is preparing for further drilling, four of which will be out and drilling in the fields in short order. This in turn will drive production upward of its 757bopd and provide cash flow. The real question for Maverick is how much time it will take to fully exploit its plentiful resource. While it is not a bad dilemma to have, it is one that could detract from the love Maverick has been feeling lately. Detractors have pointed out that Maverick’s producers so far have been on the “piddly” end of the scale. In fact, a number of its wells have stabilised in the 10 to 20bopd range. Those sorts of production numbers don’t exactly excite shareholders or the broader market, but Maverick insists that it has higher producing zones to tap if needed. But surely if it could produce from the higher zones then it would, or so the logic goes. The company has told investors that it is able to break even at 10bopd, but those who have jumped on board the MAD bandwagon would like to see the company do better than just break even. Past comments from directors in Simmons and Don Henrich point to why the company has limited production, and as far as excuses go for limiting production thus far go, it is a pretty good one. In an April Interview with Motley Fool Share Advisor the pair elaborated on why they may just want to keep a lid on things. “As some MAD followers have now realised, premature release of positive information creates the prospect of FREE TRIAL! Subscribe | Advertise FREE TRIAL! EnergyNewsPremium.net - Who is the tall dark stranger there? http://www.energynewspremium.net/StoryView.asp?StoryID=8685601[6/20/2012 11:15:01 PM] ‘shooting yourself in the foot’ in terms of acquiring the offset acreage in the vicinity,” they said. “We are pleased with the results of those wells, and for now we leave it at that.” So while Aurora Oil & Gas will be taking part in the frenzied drilling campaign of Marathon Oil, and more than likely growing its production figures at a rate of knots Maverick will be more of a slow-burner. With acreage all around Texas hotter than Texas in July, Maverick’s game is to not add to the inflationary pressure of the market by producing a bucket-load of oil, and hopefully building a massive acreage position for the best possible price. “We hear facetious comments about Maverick’s ‘200 years of drilling’ ahead at the pace we are drilling now,” Simmons and Henrich said. “We don’t think Exxon or BHP loses any sleep about having decades or more of drilling ahead. The ones who should be losing sleep are those who do not have decades or more of drilling ahead.” It figures that by going slow and steady, it may win the race. Source: ENP
FDM Price at posting:
$1.14 Sentiment: Buy Disclosure: Held
