Shares in Maverick Drilling and Exploration Ltd (ASX: MAD) are plumbing 52-week lows, down 10% to 25 cents, after the junior oil producer released its quarterly report for the period ended 31 March 2014.
Gross oil production for the quarter fell 17% versus the December quarter due to the decline of some higher rate wells.
In early April Maverick presented an updated strategy to investors, and successfully completed a $20.4 million placement at 31 cents per share. Today the shares trade at just 25 cents, a 20% discount to that placing of just a month ago.
It looks like investors are rapidly losing patience with this former high flyer. I sold my last tranche of Maverick shares just under a year ago, having pocketed huge gains on the way up. Luck's a fortune.
Although Maverick shares are down and out today, there is cause for hope. Here are three reasons…
1) Management. New CEO and Chairman J. Michael Yeager is the ex-Chief Executive of the BHP Billiton Limited (ASX: BHP) Petroleum division. He would have gone into this role with his eyes wide open, presumably confident he could turn the company's reported massive oil reserves into meaningful and exciting levels of oil production.
2) On the same management theme, Mr Yeager is building a full exploration and production management team "capable of managing multiple assets." Key appointments have already been made, with the company looking to add staff in the areas of reservoir engineering, geoscience and land management.
3) Time. Maverick is a company in transition. It is now focusing on improving Blue Ridge to a cash positive asset, building the management team, and screening for new growth opportunities. But it will take time, something an impatient stock market usually doesn't afford a former market darling.
An investment in Maverick is an investment in Mr Yeager — you are effectively betting on his management experience and skills to turn this Maverick company around.
