Maverick Drilling: from safe producer to speculative explorer

Maverick Drilling & Exploration (ASX: MAD) has transformed itself from emerging producer to speculative explorer.

Its shares may have doubled over the past 12 months, but Maverick Drilling & Exploration (ASX: MAD) has transformed itself from emerging producer to speculative explorer.

I recently received a call from one of our subscribers asking if I could recommend some speculative stocks for his portfolio.

I understand the lure of the quick, big win. It’s exhilarating. Uplifting. Muscle-building. Wealth-creating. The world’s biggest, best and easiest money making machine.

Last year, I experienced it first hand in a company called Maverick Drilling & Exploration. Long-term Motley Fool readers may have heard of it.

The short story is, on the back of a massive increase in its proven (1P) oil reserves, in the early part of last year, the share price went totally MAD…jumping from the low 20 cent level up as high as $1.50.

Happy days for investors like me who bought in at around 25 cents. Happier days when I took our own advice in Motley Fool Share Advisor and twice banked some part-profits at around $1.30, at the time a call which was unpopular in some circles.

Today Maverick shares languish back around 56 cents, a far cry from the heady days of close to $1.50.

I’m still a holder of Maverick today. I’m a happy holder too, given I’m still sitting on a double in the last 12 months, and I’ve taken some profits at what I thought was an artificially elevated share price.

Tempting yet idiotic

A few weeks ago I wrote about Maverick, saying an investment in them was both tempting and idiotic. It’s fair to say the company would not make the Scott Phillips’ cut as a ‘best of the best’ pick.

Over the past 12 months, Maverick has gone from a small emerging oil producer to a somewhat larger and more speculative oil exploration company.

Growing oil reserves can get you so far, but ultimately the market, and shareholders, need to see the money, see the reserves translated into cold hard cash.

I continue to wait, watch and hope.

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