RE: Sedalia wellBetter news. Talked with Richard Nemeth again. Says Sedalia re entry was a big surprise. They expect production above their previous guidance of 15-35boepd. 1 million cf/d test results are the equivalent of 166boepd and far above the expected results.
What happened? The previous production was from a zone that was identified by the tools of the industry 15 years ago. When they drilled out the plugs, the data didn't seem to match up. They decided to treat it like a new well and lowered a logging tool. They found a section of the production zone that seemed a better bet than the original site. They think they hit the sandier portion of the zone versus a tighter shale section that was originally perfed.
Nemeth says that Sedalia area gas wells have long lives and low depletion. He is very excited about the prospects for the next recompletion and the two drill sites on the adjoining section that MEN.v controls at 100%. They are actively searching for additional acreage in this area.
This is very exciting news because it gives MEN.v two ways to increase production rapidly. They have the 31%WI Cardium well with 3 development opportunities. They have the 100% Sedalia gas well with 3 nearby drill sites. Each of these wells could deliver 75-150boepd net to MEN.v. Nemeth said his original private hope was to exit 2008 at 1000boepd. He feels now that there is a high likelihood of that happening now.
1,000boepd would generate gross revs of 4.4million/qtr to 6.4million depending on whether the additional production of 600bpd is generated from all oil or all gas. Of course they haven't done it yet but they do appear to have opportunities to do so.
The cashflow from these two extremes is .06 to .09 per qtr or .25 to .36forward annualized. Obviously this stock will be very cheap if they hit either of these numbers vs today's .44 close.
Look for acquisition of adjoining land near either Sedalia or the Cardium well.
Another way to look at the potential of MEN.v is price per flowing barrel. If the range is 50 to 75,000 per flowing barrel and they get to 1,000bpd, the company could be valued at 50 to 75million vs the current market cap of 14million.
Obviously I am getting way ahead of myself because they are still at 80boepd but in a month, they could be at 400boepd headed towards 1,000boepd by 12/08. Bobwins