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Maverick Drilling & Exploration: Wow. Another huge upgrade

Maverick Drilling & Exploration Limited (ASX: MAD) announced a significant upgrade to their  independently evaluated oil reserves due to the completion of an initial reserve study on Nash Dome.

According to their ASX release…

  • Proved oil reserves (1P) for Nash came in at 22,481,117 net oil barrels – increasing Maverick total 1P by 80% to approximately 50.6 million net barrels.
  • Proved and Probable reserves (2P) for Nash were independently evaluated at 41,849,016 million net oil barrels to Mavericks interest – increasing Maverick’s total 2P net reserves to approximately 114.6 million barrels.

Maverick’s shares are already the best performing on the ASX in 2012, even ahead of other high fliers including Syrah Resources Limited (ASX:SYR), Environmental Clean Technologies Limited (ASX:ESI), Lindian Resources Limited (ASX:LIN) and Clean TeQ Holdings Limited (ASX:CLQ).

After the upgrade, Maverick’s shares rose as high as $1.47, giving the company a market capitalisation of close to $550 million. It’s a far cry from the days earlier this year when the shares were trading at just 22 cents.

Long-time readers will know Motley Fool Share Advisor Investment Analyst Dean Morel first highlighted the company as a buy back in August 2011. It has certainly been a meteoric rise, and a fun one too.

For those investors who took Dean’s advice way back then…

Maverick presents a compelling risk reward picture, with limited downside and excellent market trouncing upside potential.

they could be sitting on a 550 per cent gain. For an investment in a non-speculative stock, it is simply an outstanding result.

Commenting on the reserves upgrade today, Dean said…

Wow!

After the delay and the well results I thought the reserves would be good, but they’ve exceeded my expectations.

Congratulations to everyone at Maverick.

In the interests of full disclosure, Dean recently advised Motley Fool Share Advisor subscribers take part profits in Maverick.

Going forward, Maverick’s 2P net reserves of 114.6 million barrels translates to a price per barrel of under $5. Considering the price of oil is over $100 per barrel, and Maverick’s oil sells at an $18 premium to the West Texas Intermediate (WTI), that looks cheap. On a 1P basis, their price per barrel is around $11 a barrel, largely in line with the price Linc Energy Ltd. (ASX: LNC) paid per barrel of 1P reserves for fields near Mavericks.

The next milestone for Maverick comes towards the end of May, when they expect to have their maiden reserve study completed on Boling Dome. The company holds approximately 7,500 gross acres and 4,500 net acres on this established field which has already produced over 40 million barrels.

Commenting on the upgrade, Maverick’s Executive Chairman, Mr Don Henrich said:

Almost a year of preparation and execution of a well-developed plan is now coming to fruition. Credit goes to great acquisition, technical and drilling teams within Maverick. Our shareholders should be as proud of these results as I am. New drilling ahead in Nash should prove to be very exciting in the years to come. We still have our largest holdings in any oil field, Boling, yet to present to our shareholders in the near future.

The Maverick story is far from over.

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The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. Bruce Jackson has an interest in Maverick Drilling.

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