CommentLong Run Exploration* (LRE : TSX : $5.50)
Net Change: -0.12, % Change: -2.14%, Volume: 298,495
Madalena Energy* (MVN : TSX : $0.465)
Net Change: 0.00, % Change: 0.00%, Volume: 1,811,152
Encouraging read-thru…On Monday, Madalena Energy announced strong results of ~1,000 boe/d (84% oil) from an Ostracod test in west-central Alberta, offsetting LRE's land base at Cherhill. MVN's test rate directly offsets where LRE has licensed an Ostracod horizontal. Canaccord Genuity Oil & Gas Analyst Anthony Petrucci increased his target price on shares of LRE late last week, highlighting that in the September 25, 2013, Alberta land sale, LRE picked up ~100 sections of land in the Cherhill area, where the company has been testing horizontals into the Ostracod and Banff formations. While data on LRE's recent drilling activity in the area is limited, what we do have suggests potential in the area. LRE has drilled 6 wells in the region over the last two years, including two into the Ostracod and four into the Banff. While the land LRE picked up in the sale is in need of delineation before it can begin to contribute to drilling inventory, the recent activity by LRE and MVN - in addition
to licensing activity by Husky Energy (HSE) - suggests potential. With the company now holding well over 100 sections in the area, success could be very meaningful to LRE's valuation. Petrucci believes the price paid for the new Cherhill sections (~$2.1 million or roughly $30/acre) represents great value.