two opinions 1. Bill Bonner
- Manitok Energy Inc.(MEI TSX-V) –
- Mkt Cap $225 mil $2.98 Target $5.00 (6x 2013 Cash Flow)
Purchased in late 2011 @ $1.25 - MEI is an "oily" natural gas story whose success in the conventional Cardium oil play at Stolberg is complemented with nearby liquids rich natural gas in the deeper foothills regions of Alberta. The company will soon be producing 60 percent oil and natural gas liquids (NGLs). The production growth curve is up 500 percent year-over-year to the end of Q3 2012 (2,500 boed vs 400 boed) and will exit 2012 with 3,800 boed (60 percent oil/NGLs). With corporate natural gas prices averaging $2.50 /mcf, annualized cash flow in Q3 was still over $28 million, but by the end of December 2012 annualized cash flow is in excess of $50 million. The growth at Stolberg from the 9 wells drilled to date have seen IP rates up to 1,500 boed, with at least 6 wells over 500 boed. The company has very little debt, 90 conventional locations across 260 net sections of undeveloped land, and the running room to reach over 10,000 boed in the next couple years.
Read more at https://www.stockhouse.com/bullboards/messagedetail.aspx?p=0&m=31973193&l=0&r=0&s=MEI&t=LIST#p3zg5AxsZoYs2jcs.99
2.trapeze investment
’s share price has run up to all-time highs, though our estimate of underlying value also keeps rising from the growth in the company’s production, reserves and net asset value. It is now producing over 3,500 boe/d and should be at a run rate of over $50 million of annualized cash flow by year end, on nearly 4,000 boe/d of production. Value then should be about $4 per share, rising much further in the next 12 to 18 months as the production and cash flow over that period is forecast to double.
Manitok is gaining in popularity. Daily volume has increased manifold. Several brokerage firms now recommend the shares. The company is now coming onto investors’ radar screens and the larger it gets, the more screens it will appear on.
So far Manitok’s experienced team and prolific properties have contributed to 100% drilling success. And some of the wells have been beyond expectations. In fact, 2 of the wells drilled have been amongst the best drilled in Alberta in 25 years. Most have free flowed oil to surface (i.e., without fracing), a testament to the quality of the reservoir.
But Manitok still remains mispriced. If it decided not to grow but merely drill 3 wells a year to subsist, Manitok’s free cash flow (assuming $85 oil) would be about $35 million annually today. With an equity market cap of about $175 million, that’s a 20% hypothetical free cash flow yield. Hypothetical, because we expect the company to use its cash to drill at least one well per month for the next few years which should continue to add materially to the underlying value. In just 3 years’ time, Manitok should have annual cash flow (assuming $85 oil) in excess of $1.80 per share. And at 4-6x that cash flow (where its peers typically trade) we believe the share price should then be 3-4 times today's level.
The main risk for Manitok is oil prices. However, as is our opinion for gold, we forecast higher prices over the next few years. Low real interest rates, higher costs of production, and rising global demand are expected to keep both commodities strong.
Read more at https://www.stockhouse.com/bullboards/messagedetail.aspx?p=0&m=31899766&l=0&r=0&s=MEI&t=LIST#XiCb0Aoq8f7h7qv3.99