MGM Energy Corp MGMCF

Duvernay and Canol comparison

[OilEng]

I hope the map works.   If not perhaps someone can tell me how to do it. 

I apologize, for this as you are going to have to spend some time looking at this to understand it.  I think it will be worth it if you invest in the Duvernay and the Canol. 

As everyone knows, the Duvernay is a great play.  Below is a map that I constructed based on data publised by various compaanies.  It shows the hotest parts of the Duvernay - Kaybob.  I have put on it the liquid yields which range from 100 to 700 bbls per MMscf.  100 to 300 is Condensate and 300 and above is oil.  The 300 bbl per MMscf contour is 45 API oil.  You can see the Chevron lands (dark blue) that they paid $1billion for, the Encana lands (land blue) which some chinese company paid $1.2 billlion for a 50% interest.

The sweet spot of this play is North Kaybob between the 200 and 700 bbl per MMScf contours.  In this area the net pay is about 30 metres.  Father south is Yoho lands which are 100 to 150 bbls per MMscf the net pay is about 50 metres thick. 

Obviously Duvernay is a great play with great companies.  So what does this have to do with MGM?  Well there is not room for this on the board, but I have also constructed a similar map for the Canol.  If MGM lands were in the Duvernay, there lands would be between the 200 and 700 bbl per MMscf contours.  The big difference is that they have 2 to 3 times the net pay of the Duvernay and twice the porosity meaning 4 to 6 times the amount of oil .  Further the amount of aceage they have is equivalent to Chevron or Encana's. 

As I said, there are great companies in the Duvernay.  My problem is that there are none that are undervalued enough to justify the high risks. At least for my risk tolerance.  I really do need a 10x return to invest in a junior.  I have seen too many great stories go bad with junior oil and gas. 

In short, I don't just need a great company.   I need a great company that is dramatically undervalued to invest in junior oils. 

When I look at this, I think some big company is going to want the MGM lands.  We will see what kind of deal they can do.