Mart Resources Inc MAUXF

Union Securities Upgrades Mart to a Buy!!

[N2FITNESS]

Anyone else see this upgrade?

Union Securities Upgrade to Buy

Mart Resources Inc. - MMT-TSXV,
.59

Operational Update – UMU 8 Well at Total Depth

Warren Verbonac 403-205-2224 [e-mail] 21-Jul-11

Stock Rating: Buy (was Speculative Buy) Target Price:
.90

Company Description

Mart is a Canadian company producing light sweet

crude oil from high productivity wells onshore Nigeria.

The Field Production Sharing Agreement entitles Mart

to share in net revenues from the Umusadege Field at

rates ranging from 50% to 82.5 %.

The Company has offices in London, England and

Lagos, Nigeria.

Source: Bigcharts.com

Developments

The UMU 8 well has reached total depth, with oil bearing sands similar to those of the other two wells drilled from the

same pad.

Comments

The UMU 8 well encountered 16 sands with a cumulative gross pay of 385 feet, almost identical to the UMU 7 well

which encountered 15 sands over 380 feet of pay. The UMU 6 well had 18 oil bearing sands over 420 feet of pay.

Fours sands in the UMU 7 well tested cumulatively 10,373 gross bd, and the well was placed on production at 3,352

gross bd from two of the sands. The cumulative test on the UMU 6 well was 14,319 gross bd from four sands, and

initial production was approximately 4,000 gross bd.

We expect the UMU 8 well could be placed on production at over 3,000 gross bd gross, allowing Mart’s share of

production to climb to as high as 7-8,000 bd in Q4/11. In the first quarter of 2011, Mart’s share of production was

3,689 bd.

Oil from the Umusadege field ranges from 40 to 42.5 degrees API, and the high quality allows it to receive a premium

to Brent prices, which yesterday traded as high as US$118.83/b. Nigeria is the fourth largest foreign supplier of oil to

the U.S.

A pad has been constructed for another three locations, to be drilled sequentially, as development of the Umusadege

field continues.

Valuation and Recommendation

At the current stock price, Mart trades at 1.6 times our cash flow estimate of
.38 for 2011, making it one of the

best value situations in the sector. Full development of the Umusadege Field could result in at least a doubling of

gross production with minimal geological risk. Production facilities will be capable of handling up to 35,000 gross bd

(implying Mart’s share of production before payout could reach almost 29,000 bd, 17,500 bd after payout). Additional

exploration targets exist on the concession, and offer longer term growth potential.

Warren Verbonac 403-205-2224 | [e-mail] EQUITY RESEARCH REPORT

We are changing our recommendation to Buy from Speculative Buy, due to the success the Company has

demonstrated in developing the Umusadege Field; production growth in 2011 should approach 160%compared to the

previous year.

Our target of
.90 is a 2.4 times multiple of this years cash flow estimate. As the Company continues to demonstrate

success, we expect to see the stock trade at multiples more in line with the sector, with peer companies often trading

at six times cash flow, or more in the case of higher growth situations.