3 Junior O & G's you must own regardless of todays prices!
NON oil recommendations arwr and mifi - see briefs
Favorite junior oils axas, sdcjf and mqlxf.
Note; Within the last email alert we recommended SLCA @ $25.05- We now recommend that you sell the position @ $36.27- a huge short term profit!
Why invest with Energy Equities?
We have known management for over 25 years and have profited from their Oil & Gas developmental projects. In our opinion, management is very ethical and offer investors an attractive method of investing in projects that are either; PDND, PUD, recompletions or Proved developed reserves. The company never participates in "wildcat" projects
The participation also offers a 60-70% tax relief. The investor also gets a monthly check from the proceeds of marketed Oil and Gas that can last for years.
We continue to bang the drum that this oil glut is a temporary phenomenon and that change is in the wind.
The rig count has dropped dramatically, billions of dollars of O & G projects have been cancelled or mothballed, China & Europe are priming the pump for economic growth and the Middle East is ready to explode.
We believe during the third Q that we will see a rapid upside in Oil prices.
Oil and Gas are 2 of the World's most valuable natural resources and are good hedges in an unpredictable world.
The Middle East is on fire and most likely the chaos will cause and can cause severe disruption in the flow of oil.
Recently, Saudi Arabia is in combat with the Houthis ( Shia extremists backed by Iran). Yemen not only borders Saudi Arabia, but is located along an Oil trading chokepoint of Bab el Mandeb, a sliver of water that connects the Red Sea to the Gulf of Aden where 3.8 million barrels of Oil pass through everyday via Supertanker. This is just one of many hot spots in the Middle East that could cause a major War between the Iranian backed ( Shia) versus the Sunni.
Please review the "new" project below and call Energy Equities for additional information and or questions. (713-530-0480)-mention S A Advisory
MIDWAY DEVELOPMENTAL PROJECT (4 WELL PROGRAM)
Wells that are a close distance to this project.
Cannon #1 in Colorado County, Texas. This well has produced 5.5 Billion cubic feet of gas and 290k barrels of Oil in 14 months!!!! ( Monster Well)
Baker-Barnes is currently being completed and we anticipate EXCELLENT result. Completion should start within 1 to 2 weeks. Partner's should be extremely happy!
The Midway Developmental Project is made up of 4 wells to test and prove 4 different faults block.
All of these tie directly to the new Midway discovery which has proven reserves of 105 BCFG and 5.3 million barrels of Oil (mmbo).
Estimated reserves for each of the lease prospects range from 5BCFG to 2.5 mmbo.
Note: THERE ARE 2 PUBLIC E & P COMPANY'S THAT HAVE PURCHASED 50% OF THIS PROJECT! THIS SHOULD NOT BE OVERLOOKED WHILE CONSIDERING THE PARTICIPATION IN THIS POTENTIALLY HUGE RETURN PROGRAM.
THE PARAMETERS BEING USED ARE $45 OIL & $2.75 GAS. THE PAYOUT ESTIMATES RANGE FROM 7 TO 14 MONTHS. PLEASE KEEP INMIND THAT ADDITIONAL PRICE UPSIDE IN CRUDE AND GAS ONLY ADD TO A QUICKER RETURN.
INVESTOR'S SHOULD NOT FORGET THAT THE WRITE OFF IS BETWEEN 60-70% BECAUSE OF THE TYPE OF DRILLING PROGRAM.
If you have been sitting on the fence because you have been afraid of lower Oil and Gas prices it is time to get involve in this low risk high return Oil & Gas opportunity. We have said before, " buy Low and sell High, instead of buy High and hope for Higher!" For more information and doc's on this project call 713-530-0480 ask for Chauncey.
There is only a small amount of this project available
CCNI- Staffing Company (.73) We originally recommended CCNI @.20. The company provides on-demand employees for manual labor, light industrial and skilled trade application's in the US.
Insider buying has been very consistant.
Revenue and earnings for 2014- $92 million and .11 net income/sh. Trailing 12 month PE is only 6.6x
The peer group of staffing companies trade at double or triple this PE.
CCNI could easily be sold for $1.50/sh
Visit their website and review the recent presentation.
Major and minor companies continue to reply heavily upon staffing companies because of Obamacare, slow economic growth and overall cost reduction by hiring on-demand employees.
We rate CCNI with a strong buy rating at current levels.
Arrowhead Reseach Corp. (arwr)
ARWR ($7.34)- develops novel drugs to treat intractable diseases. The company's principal product candidates comprises ARC-520, an RNAi based therapeutic that is in Phase 2a clinical trial to treat chronic hepatitis B virus infection; and ARC-AAT, a novel unlocked nucleobase analog containing RNAi- based therapeutic for the treatment of liver disease associated with alpha-1 antitrypsin deficiency. Its platform technology include Dynamic Polyconjugate platform , an RNAi delivery system that addresses multiply organ systems and cell types.
Please visit their website for further discussion about their complete business model.
On or about March 5th 2015 ARWR acquired from Novartis their complete RNAi research and development portfolio for cash and stock ( $3 million in cash and $25 million in stock within 30 days. Novartis is also eligible to receive milestones and single digit royalties on sales of future products in connection with the agreement).
Please keep in mind that we are not an expert in the field of Biotech and RNAi technology. We are looking at ARWR as a very interesting strategy play on promising results due out during the 2nd Q of 2015. At this point we are only interested in the drug testing of ARC-520. Worldwide especially Asia and other third world countries there are estimates of over 350 million people are chronically infected with HBV. The US and Western Europe only account for less than 1% of the global chronically infected HBV population.
This is a staggering number and explains why the potential for arwr shareholders is beyond enormous.
The test results from a phrase 2 study being conducted in Hong Kong is due during the second Q of 2015. We like the potential and see extraordinary return near term if the result prove positive.
The company presently has around $125 million in cash and the burn rate is around $20 million/Q so sometime next year ARWR will need to raise cash in order to continue their numerous trials and to take advantage of their recently acquired technology from Novartis.
In our opinion, they already know that they had good if not great results- why else would they purchase this property? It will cost 100's of millions of dollars to continue to develop all the possibilities that is currently within ARWR stable.
My assumption is they got something and know once announced that a major drug company like Gilead (gild), Novartis (nov) or even Shire plc ( shpg) will step up to the plate with a tremendous cash infusion ( $1 billion or more) to grab a huge royalty from the eventual sale of the product worldwide. This huge cash infusion will allow development and delivery of potentially many new life saving drugs.
This story offers plenty of fire, but there is more! The current short position is over 30% of the current outstanding shares of around 50 million. The scenario- ARWR announces good-great results, the buyer stampede in because of the huge potential, the shorts trample one another and cause a huge squeeze that push ARWR share price into the stratosphere !
There could and should be more. If one of these majors announce a huge cash infusion- just think what this stock is going to do!
Long term this stock has the potential to hit $100 if the stars line up for them or the company could get bought out. Anyway you slice, dice, splice or bind ARWR offer investor's a huge upside potential during the next couple of years unless they are bought out!
We would play this in 2 ways: Own some common and load up on out of the money calls for May, June and July. The reward potential by purchasing calls and being right would be a exponential! There are numerous conference calls and seeking alpha reports that go into much greater detail that we care to be involved with. We are after a strategy that we believe has merit with limited downside risk and "bank' potential.
Novatel Wireless, Inc. ( mifi- $4.75 )
The company is under new Management and a major player in the company is a Billionaire-- keep that in mind!
MIFI provides wireless broadband access solutions for the mobile communications market worldwide.
The Mobile Computing Products segment offers MIFI intelligent Mobile Hotspots, the company's flagship product provides connectivity option for WIFI -enabled devices, such as ipad, Kindle tablets, PC's,MP3 players and gaming devices; 4G LTE Broadband Router with Voice, a wireless solution that supports wireless voice and data; USB and PC-card/Expresscard modems for wireless broadband ; and embedded modules for use in computing devices, such as laptop, PC's, netbooks, tablets and other electronic products to provide wireless access. The M2M Products & Solutions segment offers MT and SA integrated solutions for monitoring and managing mobile and fixed assets, vehicle tracking and diagnostics, and workforce tracking management functions.
The reason for the interest in MIFI!
1. CEO Alex Mashinsky is worth $1 Billion and that is worth the weight in gold as they say.
2. Phil Falcone replaced management and controls 15 million shares of MIFI via HCHC ( public company)
3. Management "crows" that rev will grow to $400 million via organic and by acquisition during 2015.
4. Recently Management has decided to take 30% of their salary in stock. Very. Bullish!
5. New Products are being introduced.
6. The company has deep relationships with the major carrier- such as Verizon and others.
7. Management has Investment banking relationships that will offer equity raise when a proper candidate is located.
8. HCHC(symbol) which is holding company holds around 7.5 million direct shares and a round 7.5 million share indirectly. Some may prefer to purchase shares in HCHC. We assume that there are around 50 million shares fully diluted.
9. Visit their website www.novatelwireless.com and review their current products via Download tab.
10. A very deep and extensive list of releases during the past 6 months. New Management is making a statement with words and action- very bullish
11. Go and review the 27th Annual Roth Conference on Tuesday March 10th 2015 visit http://nvtl.com/about/investors/. 12. Debt load is only $5.9 million and cash in the bank is around $18 million which include Marketable securities.
13. Read the Feb 19th 2015 year-end report. This gives you a feeling of where this company is headed near term.
Bottom-line: We have new management, new products, looking for acquisitions, management taking 30% of salary in stock, management has deep relationship with brokerage community, long term relationship with Verizon and others and has the desire to grow shareholder value!
We like it and own MIFI at current levels and have placed a strong buy rating on the shares for short and long term appreciation.
PS: Major announcement on March 30th 2015
MIFI acquires Feeney- See press release dated March 30th 2015. The company was acquired for $25 million in a combo for cash and stock. Feeney (FW) has 91 full time employees. Estimated revenue from FW for 2015 equals $38 million and the transaction is expected to be immediately accretive to MIFI's revenue and earnings for 2015.
HC2 Holdings(HCHC) The largest shareholder exercised $8.6 million in warrants to purchase MIFI common.
VERY BULLISH SCENARIO
We have management taking stock instead of cash. We have management investing more money in the company. We have 91 new potential investors ( employees from Feeney). Terrific fuel for a move to higher highs- the shorts could get very nervous!
Please listen to the conference call on March 30th 2015!
Management still anticipates that revenue will reach $400 million during 2015 via organic growth and M&A!
Gartner Research estimates that LoT product and service suppliers will generate incremental revenue exceeding $300 Billion by 2020!
We rate MIFI with a strong buy rating for short and long term appreciation.
3 O & G opportunities that will survive and most definitely prosper short and longer term. All 3 are takeover candidates.
We all know that the O & G Industry is in a real "pickle" ! We are dealing with a glut created by greater supply and a weak demand. The other culprit is the strength of the US dollar which has been on rocketship making a 12 year high against the Euro and other major currencies , which in turn being traded in Dollars has added to the downward price of WTI. There is fear that the storage capacity is at a critical state and that there may be point in time within the next couple of months that there will be know where to put the stuff! The talking heads continue to "crow" and we have even seen estimates of $10/ barrel. Of course every time the Oil price firms the Arabs ( our friends ) come out & continue to say that they will not reduce production , which then causes new pressure on the price of crude. The speculators also have a hand in the pricing. Many continue to "buy" dollars and "sell" crude. This strategy has worked, but watch your back. The Middle East continues to be a bomb ready to explode so there is always the potential of Oil disruption that could cause quick shortages.
In our next piece we mention that the US government could finally do something positive and use their head instead of their tail and start buying Oil and place it in the Strategic Oil Reserve for future sale or a doomsday scenario. If they only could be so smart! It is too bad that Obama does not have that ability.
Concerning Iran- If a term sheet emerges which controlling Iran's Nuclear ambitions then some time in the future Iran could produce another 1 million barrels. All of this weighs on the Oil market, but there is always the unknown that goes bumps in the night!
3 favorite oils- they all have the same thing in common: 1. Well run by experienced management.
2. Low debt load
3. Most acreage held by production so they are not forced to drill or lose acreage.
4. All appear too be entering a slight "hibernation" mode-- reduce CAPEX while reducing all cost across the board.
5. All of them worth much more than the current price indicates ~ especially sdcjf and mqlxf.
6. All could be tasty takeover candidates.
7. In reality the strong Dollar is one of the main culprits for their low valuation
8. Buy low when the blood is flowing thick and be rewarded with exponential upside.
Our 3 candidates~ axas, sdcjf and mqlxf
1. AXAS-($3.28) drills the Bakken & Eagleford, very low debt and attractively hedged for 2015. Dramatically reduced CAPEX for First 1/2 of 2015. AXAS is semi- hibernating until crude price firm. Read the March 4th 4Q and year-end + 1Q guidance. Visit www.abraxaspetroleum.com and review and listen to earnings conference call and review Corporate Update for March 2015. Current price around $3.28 and worth every penny. Buy low and sell High! We have been involved in AXAS for at least 3 years and appreciate management ability to run a tight ship. This is not their first rodeo! We rate AXAS with a strong Buy rating for short and long term. We suggest that you start building a position in AXAS incase there is sudden crude price and dollar surge that will take AXAS down for additional buying opportunity in our opinion.
2. SDCJF(.355) ( Australian symbol sea.ax- primary exchange}. We have been involved in SDCJF from 2010-2011 when the company was only producing around 650 BOEPD! At present SDCJF produces over 9500 BOEPD. This management team is sterling! They buy low ever time and sold really HIGH, which allowed them to grow and concentrate on the "big" prize in their opinion- being the Eagleford! They have cash, low debt, stable production and are not in any rush to drill at current levels. Most of their acreage is already bound by production so there is little reason to drill "willy nilly ! As mentioned, this management team is stellar and they continue to turn coal into gold for 100"s of millions of dollar during their history. Visit their website www.sundanceenergy.com.au and review their 4th Q earning call with presentation. Review their March 9, 2015 presentation.
The tail wags the head in this situation because the primary market is Australia and as you know the Australian Dollar has been creamed and because of this it weighs on SDCJF's shares. So we get it both ways. All their acreage and production is located within the US and we are controlled by the severe weakness in the AU dollar. Regardless, when you consider the reserves & the lean and mean management team that continues to steer SCDJF you must build a position in this stock at current levels. Again, if we have a temporary crash in crude we would continue to average down on this junior core holdings. We view SDCJF as an attractive takeover candidate worth around $2.00 a far cry from the current depressed levels of .355. We rate SDCJF with a strong buy rating at current levels.
Additional info: 2014 Annual report was just released. Visit the corporate website and review this excellent doc.
Food for Thought: P1+P2+P3 have an estimated value of $1.5 Billion dollars! The current market cap is only around $200 million! Get the picture!
Exit rate for 2014 was around 9500 boepd- Exit rate for 2015 is estimated to be around 8500 boepd.
The company states that they will be actively looking for a M&A candidate. In my opinion, they should look out themselves! The big fish eat the little fish!
We are pounding our hands on the table concerning SDCJF!
3. MQLXF(.47) ( Canadian mql.v primary market )
Primary area of drilling located in Alberta, Canada. The actual drilling area is known as the Michichi. They have amassed a huge chunk of this "light" oil acreage and actual own the "cherry" of the whole prospect.
We have watched Richard Thompson transform this junior O & G into a well focused, low cost producer and very low debt. Their reserves from p1p2p3 are massive and the share price does not even come close in mirroring the true value of mqlxf regardless of the current price of crude. It is important that you go and read the Jan 20th, Feb 4th and March 19th & 20th press releases. Their website www.marquee-energy.com
The company also released a March 2015 presentation that indicates just how cheap this company's shares are trading at when you consider the low debt, cash flow and huge reserves. We believe that MQLXF is worth around $2.00-$2.50/sh- a far cry from the current .47 US level!
MQLXF also has an enormous tax pool worth $226 million and much of 2015 production has been hedged. During the first half of 2015 MQLXF has reduced their capex program. Regardless MQLXF should be bought. Buy low and sell high!
It is a close call to decide which is cheaper-SDCJF or MQLXF! Our suggestion is to buy both with a shovel!
What a Mess!
We have a hard time understanding how our President continues to be in total denial about the ISIS threat around the world. It was first called a JV team and now the world watches as country after country gets invaded by the Islamic Terrorist Threat . First it was Syria and now we have Iraq, Libya, Yemen, Egypt's Sinai and possibly Tunisia. The present administration just continues to draw red-lines and is almost in denial that the Middle East is ready to detonate.
Obama as we know continues to pit black against white, gay vs straight, men vs women, he coddles our enemies and debases our allies and he is actively destroying our military might.
Not sure how we will last another 2 years with this hollow suit that the morons of America voted in for the 2nd time.
We know that the GOP is too blame for their leadership pick's ( Romney and McCain). Both did not have the "balls" to go after Obama on many of the issues that should have been "front and center"! Every aspect of Obama's beliefs are completely opposite of ours. We believe in Capitalism, a strong Military, guns and do not believe in taking from the rich and giving to the less fortunate.
We need less regulation and lower taxes for companies so they have the incentive to hire Americans instead of creating jobs offshore . There are Billions & Billions of American Corporations funds sitting offshore that will not come home because of the high tax rates. Mr. President offer these companies a window with very low tax rates and the promise to create jobs- This would help this economy grow..
Mr. President, with the price of crude at $49/barrel why are you not filling up the Strategic Oil Reserve. Why are you not buying 500k barrels/day, which would help get rid of this glut and reduce the destruction of our Oil and Gas Industry that created millions of jobs and help us to grow Energy Independent from the Middle East? At present there is room for some 50 million barrel that could be stockpiled in the SPR. It is hard to believe that Obama and his idiots at the Energy Department do not see the advantage of this plan? The reality is that he has always hated the Oil and Gas Industry and as we know prefers the Alternative Energy sources.
I am not sure that he realizes that with such low energy prices for crude that most companies and consumers are steering clear of the wind mills, solar panels and electric cars.
Another situation that we find to be the saddest part of his administration deals with Iran and the Bomb. Everyone knows that Iran has only one objective and that is to produce a Nuclear Weapon in order to bully the Middle East. Iran has been in a proxy war with the Evil Satan since 1979. During the past number of years Iran has supplied terrorist with IED's that have killed and injured 1000's between Iraq and Afghanistan. The leadership within Iran should be removed, but instead Obama wants to be their friend and prefers to have Israel as the enemy.
The interest rate saga has the US market's in drunken state of mind. In our opinion, the FED cannot raise rates because there really is no growth and 5.5% unemployment rate is a mirage. How do you consider raising rates when there are 98 million American's out of work and 48 million of the on Food stamps. There is ZERO wage inflation and since Obama has been in office the average family has earned thousands of dollars less than when he took office. How can the FED raise rates when during the past 1 year or so 40+ countries around the world have lowered rates, which in reality acts as a raise for our rates and has in turn created a Dollar Bull market that is destroying commodity pricing and hurting the Multinational Corps. The strong dollar (12 high against the Euro) reduces the chance that foreign Companies would want to build plants in America because of the high labor costs and high cost of doing business.
We need a lower dollar in order to become more competitive world- wide and an incentive for companies to want to expand and develop a foothold within the US.
The American worker has gotten screwed with this current administration. As mentioned many jobs are being shipped overseas, the illegals are getting SSN's and stealing jobs and because of Obamacare many full time jobs have become part time jobs and the 40 hour work week is now the 30 hour work in order to skirt some of the cost burdens that have been placed upon the highest taxed corporations in the World.
Are you starting to see the big picture?
America has been transformed into a state of reduced greatness and working on $18 trillion in debt. The only reason that this debt load is not larger relates to extremely low interest rates that we a paying on this debt load.
Can you imagine if we have the tag team, the Clinton's for the next show ?? I surely am not interested in another Bush either. It is like Jerry Brown in California, the governor 25 years ago and now the state has him again. Is this the best that California can do. In California the mandatory language is Spanish forget about English. Truly Liberalism is a mental disorder- most likely just as debilitating as cancer. Cancer kills the body- Liberalism kills Countries!
Here is an example how being in the wrong business because of poor policy. AK Steel (AKS $4.42) large part of business model is the production of steel pipes for the Oil and Gas Industry. Well as you know everything is not rosy in that industrial segment. AK is suffering! If that was not bad enough because of the strength of the US dollar imports from China are flooding our shores and being dumped on the US market causing additional strain on this company and hundreds of others. The relationship between the "hated" Oil and Gas Industry are very far reaching. So frolic and curse the Oil and Gas Companies, but one of these days the lack of drilling for the future could and most likely will cause an Oil shock that will make your head spin!