GREY:MGMCF - Post by User
Post by
OilEngon Jan 22, 2013 7:27pm
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Post# 20874882
Keeping it Real
Keeping it Real As Glacierman and Shambano have said, stay focus on the intrinsic value of the stock. The East Mckay well that MGM will be spudding on Friday is just 2 miles north of I-77 which was drilled many year before the oil industry had the technology to make oil flow from shale. This well has lots of oil and E. McKay is highly likely to be similar because shale is widespread.
- So first take home point as Glacierman says: This is not a wildcat exploration well with a 10% chance of success. This is more like a development well with a 90% chance of finding oil.
- Second point, there is a lot of oil in I-77. Here is the link, go to page 9. The time it takes is definitely worth your while, if you want to know what you are investing in. Here is how you read the log. Green is oil, blue is water and yellow is silica. As you can see there is a ton of oil. With net pay in the Bluefish and Canol of almost 71 metres. That is as high as a 25 storey building. That is a hell of a lot of oil.
https://www.mgmenergy.com/upload/media_element/119/01/mgm-energy-corp_2012-capp-conference-presentation.pdf
- MGM is going to fracture the Bluefish and put two fracs into the Canol. I confirmed today that they will be oil fracs. Notice I said two fracs into the Canol. The reason is that the zone is so big.
So finding oil is not the big risk. Getting enough oil out of the Canol and Bluefish to make the wells commerical is the risk. If we get a 100 bopd test that will be adequate. Remember that this is a vertical well and horizontals produce 5 times as much as a vertical. I have looked at the Eagle Ford, Bakken, Durvenay, Montenay plays and this looks better. It has higher porosity, higher Total Organic Carbon (TOC) and is more brittle than it competitors. The only negative is that it has a lower pressure. I think the other factors will more than compensate for this downside.
The yawning gap between the share price and the intrinsic value is so big that the we have a huge safety margin. MGM is worth many many times it present price. PIty the folks who are selling. It like buying the Mona Lisa in a garage sale and selling it for a couple of thousands dollars. They are going to have severe seller's remorse.