At present the NPV10% equals $286 + $471 million in Canadian dollars. Fully diluted shares outstanding which includes all common, warrants and options equals 288 million or $2.42/share [ $286 + 471 -70 (debt) + 11.4 (cash from options and warrants )] The current share price of .13 is only 5% of the current NPV10% and could appreciate 19X to equal this valuation. SUPER POTENTIAL & SUPER DISCOUNTED VALUE.
Manitok Energy, Inc. (mei.v-.13) or (mkryf-.10) highest production in 2 years prior to the major announcement on Sept 29th 2016.
We believe that Oil/Gas prices have seen their historic lows during the past few years. We foresee $60 oil (WTI) & $3.50 Mcf for gas during 2017. See reasons below.
1. The Natgas market has been in a glut for 2 years because of an over abundance, warmer winters and dramatic Natgas finds. During the summer of 2016 the glut has vanished for the time being. Canadian Gas (Alberta Gas) was priced; April $1.00/MCF, May $1.00, June $1.40, July $1.80, August $2.30, Sept $2.35 and as of Oct 20th 2016 prices have climbed to $3.10
It is anticipated that Natgas during the winter of 2017 will reach $3.50-$4.00. This of course bodes well for Natgas E&P companies in Canada and abroad.
Another document that indicates that the glut is gone and that we are entering high demand usage do to the Winter months and Natgas continues to increase in demand over the use of coal.
Very Bullish article on Natgas pricing going forward. The usual results when you have great demand because of usage needs and actually a drop in drilling because of the glut during the past 2 years. Bodes well for firming and higher highs in gas pricing in North America.
We know that the oil market has been in collapse mode for the past 2 years and is setting the stage for a catastrophic situation in the Middle East if it continues. The catastrophe could come in three stages of war within the boundaries of each sovereign (war between sovereign states) and most broadly, for the Intra -Islamic fight between the Sunni and Shia to devolve into a war of finality between them, with one side vanquishing, conquering and even attempting to extinguish the other.
When one considers CAPEX during the past 2 years~ at least some $400 billion has not been invested to replace production~ the end game does not paint a rosy picture.
If we look at rig count for the US as an example; March 2015 there were at least 1000 rigs in use. Fast forward to Sept 1, 2016 we have only around 500. If we look back to November 2014 the US rig count was an amazing 1925! Capex has a correlation to rig count and production and even though the shale boom has diminished it has not disappeared, the game that we have been playing will cause an oil shock on the upside sooner than later!!
Note: Year-over-year oil exploration in the US is down 36%. Gas exploration is down 53%
Canadian rig activity was down to 134 for the week ending September 9,2016 and is 51% lower than last year. During November 2014 the rig count in Canada was 421.
Everywhere we look rig counts are down from a few years ago, capex is and has dried up, BK since the beginning of Jan 2015 to August 1, 2016 has reached 138 in the US alone. Canadian Oil and Gas companies have not been immune to the carnage.
This Oil bust has wiped out some $76 Trillion in Proved Reserve by the collapse of oil from $100 to $50/barrel! Reality check: The surviving O & G companies will prosper once the trend flips and that trend is closer than most believe or think.
Manitok Energy is one of many that has made it to the other side and the patient investor that has either held on and/or averaged down as the share price has evaporated. A robust reward is looming and gobbling up cheap shares should reward the risk oriented investor handsomely near term.
Saudi Arabia is running a huge fiscal budget deficit because of marginal Oil prices and has been producing as much oil as possible to help meet fiscal budget requirements. The fiscal spending is required to fund the social programs. The Saudi government is fearful that reducing these programs could lead to social unrest and even civil war (Sunni versus Shia ).
It is our belief that after the pending meeting in Algeria Sept 26-28 2016 that OPEC will decide to cap production and attempt to create an environment for crude to rise in price to the $60 level during 2017. (Update: Since the meeting a potential cap is in place & will be effective towards the end of November 2016.)
The major road block during the past year has been Iran's refusal to curb production until they returned to pre-sanction levels. The Saudi's & Iranians hate each other because of Sunni vs Shia population. The Russians have also been an issue. Fast forward and we believe that all parties have had enough and see that the damage that has been done worldwide will take years to recover and once it does that the demand will be there .
This scenario bodes well for small O & G companies that have navigated this troubled scenario either by dilution, merger and acquiring cheap assets for future development.
This article throws to caution the wind, but we still believe that we are getting closer to something. The following meeting for OPEC is Nov 30, 2016. The reality is that the longer prices stay depressed the worse it is going to be for the world when the spring just cannot be tightened anymore! Just imagine if the Strait of Hormuz is partially closed because of a conflict or one Middle East Nation starts firing rocket @ one another and all Hell breaks loose?
As painful as it has been during the past 2 years of O & G investing YOU must be in this group for the eventual "rocket" rise! Manitok Energy is a great example of a place to park investment capital for future appreciation.
Please review the following article:
Another great article:
China recently announced that Oil production is down 10% for the month of August because prices are to low and will not see an uptick in E & P unless they see $60 Brent. Their demand for foreign oil will continue to increase. Even though there is a slowdown in Asia due to many factors, the overall market continues to re-balance. We continue to believe that well run juniors (mkryf .10) that have survived this recent "slaughter" can capitalize on the coming squeeze because of increasing demand and a lack of supply. An Oil glut may still be hanging around, but outside developments can have a severe impact on pricing because of unforeseen events. The IEA only sees 100K barrel increase in demand during the balance of 2016 and a 200K barrel increase during 2017.
Regardless, we believe that a bottom is $40 and a target of $60 during 2017 is highly likely.
There is very little doubt that the oil market will remain very choppy until the end of 2016. This time of year is usually the weakest because of refinery maintenance. Gasoline usage drys up from the "sun & fun" and prior to the winter weather patterns are anticipated to be much colder than normal during 2017. Once winter demand develops there will be a firming of Oil prices worldwide, which will result in the firming oil shares!
The Natgas glut vanishes because of increased demand and collapse of rigs drilling for gas. Manitok's production consists of 55% Natgas 45% oil. The gas market is surely heading into the high $3's during the next 6 months. Keep in mind that during 2009 there were 1600 rigs in North America drilling for Natgas. Recently the number reached 81 according to Baker-Hughes.
Another interesting sidebar: According to H Clinton~ During a late July tongue wagging~ She announced that she would do her best to ban fracking in the US! This of course would increase our dependence upon foreign fossil fuels that would put our country at risk and create an even greater financial drain and a huge loss of jobs. Both Canada and the US need a vibrant O&G industry not only for National Security but also for job security.
Please review our North American Junior Oil & Gas investment that in our opinion has dramatic upside potential during the 6-18 months and beyond. If our scenario plays out we could easily see this .10 investment appreciate to .40-.50 . Higher Oil and Gas prices not only increase the cash flow of the company, but also elevates net asset value (NAV).
We believe that this article levels out the playing field on the less bullish side of the fence . The Oil market has always been a function of total world controlled chaos. Please review this article.
This article below features an interesting spin on Oil prices during 2017. GS ( Goldman Sachs) has been all over the map in recent years from $200 to $20/barrel. One thing for certain is that the Oil market takes NO prisoners.
Hot off the press that the ME giants have decided to cap production taking place towards the end of November 2016. In our opinion, the future reduction will aid in the re-balancing of the Oil market heading into 2017. The pain of lower oil prices bodes well for low cost E&P in Canada and the USA. We believe that upon review of all the data presented concerning our junior oil pick (Manitok Energy) can benefit dramatically!
Another interesting article that should be read regarding the bullish stance for Oil.
The missing link - Russia has decided to limit production and go along with Middle East Members of OPEC. Of course if a real freeze happens and demand increase as anticipated, then additional firming will take place. Additionally, $60 WTI can happen next year and companies like MEI.V will surely benefit from dramatically higher share prices.
Keep in mind that 55% of MEI.V's production is Natgas and prices have exploded on the upside during the past few months.
Our final article deals with the $10 trillion dollar demand for oil & gas development that will soon be upon us. Companies that have survived and expanded will surely benefit from this severe vacuum that has been created during the past 2 years . Manitok, a small but growing company has survived and has been expanding rapidly to take advantage of cheap assets, cheap E&P and firming prices.
MANITOK ENERGY (MEI.V -.13~~~MKRYF .10)
Manitok Energy is an Oil and Gas exploration and development company focused on conventional light oil in Southern Alberta and conventional light oil and gas reservoirs in the Canadian Foothill.
52 week range .075-.50
Market cap~ $37.4 Million CDN( This number includes all options and warrants).
Note: Cash flow estimates for 2017 based upon 6800 boepd. If we use WTI $50/bbl we get a CAD $8 netback/boe or CAD $19.1 million. If we use WTI $60/boe based upon 6800 boepd we get a CAD $12.50 netback/boe or CAD $31 million.
Investor's should take some time a review the Sept 29th 2016 Presentation. This important presentation talks about the just released information about their current asset acquisition and a new funding. Based upon Pro- forma year production could reach over 7,000 boepd. http://files.constantcontact.com/3a82c0b6be/57612856-4827-4952-b530-f2a61191ee7d.pdf?ver=1475624834000
Upon review of the 2nd Q it is easy to see that it was not the greatest. We had oil prices climbing, gas prices slipping and continued dilution because of capital raises. It is our belief that Manitok is finally ready and able to fire on all cylinders.
Prior to recent acquisition:
Current production 4800 boe/d (45% oil)
Replaced 2015 production by 360% & 480% with the increase in TP & P+P reserves, respectively
The Company's 2015 average F&D costs & FD&A costs are $7.54/boe & $6.88/boe respectively for TP reserves. The FD&A for P+P reserves is $5.26/boe
Total number of drill locations including all properties equals 314 Southeast Alberta (28 Lithic Glauc Oil (Carseland), 131 Lithic Glauc Oil (Wayne/Rockyford), 137 Basal Quartz Oil.
Stolberg (8 Cardium Oil) & (9 Mannville Gas).
Total NPV 10% (Total net present value) respectively $64 Million Carseland,$147 Million Rockyford,$104 Million Basal, $24 Million Cardium and $20 Million Mannville.
TOTAL NET PRESENT VALUE/SHARE $2.42 ( based upon 288 million fully diluted outstanding shares).
Note: Total net present value (NPV-10%) is a whopping 19X the current share price of $.13cdn
TP (P1 + P2) (Dec 2015)~ 17.6 million boe.
2P (P1 + P2 + P3) proforma ~28.4 million boe.
TP Rserve life (P1 + P2) ~12 years.
2P Reserve life~ 18 years.
Gross total land (93% working interest 483k) Gross undeveloped land 91% working interest 442k
Manitok has 92% of its 2016 anticipated oil production hedged for the remainder of 2016.
Manitok's oil plays have strong drilling economics @ $40/bbl WTI. The rate of return increases dramatically from WTI @ $40 to $60 ( We believe that is a fair target for Oil prices during 2017).The rate of return for properties; Wayne 21% to 120%,Cardium 49% to 210%, Carseland 55% to 227% and Basal goes from 0% to 68%.
Many factors in our opinion will cause Oil prices during 2017 to climb to this $60 price target that will create a huge windfall for Manitok Energy and will of course cause the currently depressed shares to climb dramatically.
Wayne Oil Facility~ Wayne facility was acquired in June 2015. The facility~ Wayne 1-20 battery and acid gas injection integrated with 8-23 satellite. Oil treating 9,400 bbls/day, truck-in 72 loads/day and acid gas disposal. Emulsion handling>31,000 bbls/day, water disposal 26,000 bbls/day.
Manitok's drilling program commenced in mid-September, with an anticipated spending of $10.6 million on drilling & completion using funds from operations, credit facility and the funds received from recent "Raimount Arrangement & Subscription Receipts.
The drilling program will consist of hz Lithic Glauc wells in Carseland, Rockyford and Wayne in southeast Alberta, drilled using a monobore plan. By using the monobore drilling plan, Manitok expects to reduce drilling and completion costs/well, from $2.7 million in 2014, to between $1.3-$1.5 million depending on the length of the hz well bore and the number of stages used in the multi-staged fracture stimulation completion.
The first 2 LG wells drilled by Manitok, starting in mid-September, will be in Carseland on existing pads which will require less time and capital to tie-in. The third well of the program will be in Wayne, where Manitok will test the LG trend from a pad near an existing gas pipeline, which will also allow for a quick, low cost tie-in. The remaining 4LG wells are anticipated to be drilled in Carseland, Wayne and Rockyford, depending on the results of the first group of wells drilled.
The combination of Manitok's drilling program and the drilling activity and capital commitments pursuant to farm-out agreements with two private companies, that have either spent to date or committed to total drilling and completion spending of about $21.4 million in 2016, is anticipated to satisfy Manitok's 2016 drilling commitments.
Based on field estimates, Manitok's production averaged 4825 boe/d from September 1st, 2016 to September 19th, 2016 with approximately 40% being light oil & NGLs. There is an additional 500 boepd from 2 wells yet to be tied-in at Carseland. Management has decided because of low commodity prices to stall the tie-in until Q1 of 2017.
NOTE 2: The above production numbers are from the Sept 26th update.
Current press release-Sept 21, 2016
Presser conveys successful production from first of a series of 5 wells to be drill during 2016 from varied acreage that is controlled by Manitok.
This first well located within the Rockyford area using "monobore" drilling has saved the company over 50% drilling and completion cost ( based upon 2014 costs). Initial production is 400 boepd and the well is still clean up from frac fluids.
We are very pleased with this well and Manitok plans on drilling an offset to this well later in the year.
Press release~Sept 26, 2016
Truly exciting times for MEI.V or MKRYF concerning record production ~Highest production in 2 years. The average rate reaches 4825 boepd. Management intends to drill and complete 5 wells prior to year-end and anticipate tie-in.
MAJOR PRESS RELEASE - DATE SEPT 30TH 2016
MEI.V ANNOUNCES SIGNIFICANT ASSET ACQUISITION~ 1934 BOEPD, 34% LIGHT OIL AND NGLs) AND INCLUDES 90K ACRES OF MATURE CARDIUM LIGHT OIL AND NATURAL GAS ASESTS IN THE WILLISDEN GREEN AREA OF W CENTRAL ALBERTA AND THE BALANCE OF THE ASSETS ARE FOUND IN THE WILDCAT HILLS AND ENCHANA AREAS OF ALBERTA. SEE COMPLETE RELEASE BELOW:
SEPTEMBER 30TH PRESS RELEASE #2
A NEW FILING FOR FUNDING WILL BE USED TO ACQUIRE THE PLANNED ACQUISITION STATED:
Most current press release: October 12, 2016
Oil and Gas preparation drilling rig onshore.
Another video concerning drilling
Horizontal drilling and fracking:
QUESTION AND ANSWER:
President and CEO~ Massimo Geremia
1. When the current acquisition closes how many common shares will be outstanding?
Mass: 288.6 million shares which include 45.1 million warrants (34.8 million warrants @.18 from the notes financing and 10.3 million @ .30 from the Raimount acquisition).
2. What is the exercise price of the warrants?
Mass: The exercise price is .18 Canadian (MEI.WT and the "Notes" that contained the warrants MEI.DB) The warrants are non-callable and expire in 2021.
3. Because of the new infusion of funds are you anticipating drilling any additional wells beyond the 6 that you have announced in an earlier press release?
Mass: At present NO other plans until current drilling commitments are satisfied. We will pay down debt for now and possibly utilize the liquidity in the 1Q of 2017 with follow up drilling from our best results or possibly another acquisition.
4. Are you done raising money, diluting and selling debt?
Mass: We are in a capital intensive business, and everything is about growth. Until Oil is trading at greater than $60 WTI, there is potential for issuing shares to either pay down debt, make an accretive acquisition , or to expand the drilling program. The value proposition on the proceeds from equity has to be outstanding from a reserves perspective.
5. Are you planning a reverse split?
Mass: No reverse split in the immediate future.
6. As you know, Natgas has been on a tear lately, January futures in the US are around $3.50 and $3.10 in Canada. What does this mean for MEI.V ?
Mass: Every .25 increase in Natgas increases corporate cash flow Netbacks by .81/boe! Every US $10 rise in the price of WTI equates to a corporate cash flow Netbacks increase of CAD $4.50/boe.
7. AT $50 WTI can MEI.V show a profit?
Mass; Cash flow Netback (net of G&A, Taxes, Interest, etc) would be around CAD $8.00/boe at $50 WTI .
8. Anything else you would like to expand upon?
Mass: Management has been aggressively reducing G&A costs over the last 2 years, along with the increase in production from the acquisitions and drilling, the per boe cost will decrease significantly. Our target is to below $2.50 in 2017. As our production increases, the average royalty rate and interest charges, on a per boe basis, will also decrease. We see opportunities for additional acquisitions and will pursue accordingly. As our production grows, and prices recover, our reserves and cash flow will increase dramatically to benefit our shareholders.
Thank you Mass!
OVERVIEW & RECOMMENDATION:
Manitok has survived the Oil and Gas bust and has now positioned itself for growth by the "bit" as well as by raising money to acquire cheap assets and production. The dilution has been great, but the NPV10% has been even greater & the current drill locations we keep Manitok busy for many years. As mentioned, during Sept 2016 Manitok reached record production and there are not that many E&P companies reaching these goals especially in this pricing environment. The recent pending acquisition adds additional production at a very attractive price. We all know that there have been many BK's during the past 2 years & fossil fuel assets have been sold at fire-sale prices. We should also not forget that drilling and completion costs have also collapsed. When you add in the sudden spike in Oil and the dramatic move in Natgas the combo of all these events indicates an opportune time to invest in MEI.V or MKRYF at these very depressed prices.
Please make sure that you review the most current presentation on their website and, of course, read all the pressers that i have included within the document that in our opinion paint a very Bullish growth scenario for Manitok Energy during the next 6-18 months.
Many investor's have purchased Manitok at higher prices and this is a great opportunity to average down and take advantage of the upside potential that we believe is upon us.
Manitok has the management, production, drilling locations, organic growth & acquisition minded theme, cash, decreasing debt, lower costs and higher fossil fuel prices.
The current scenario leads us to place a Strong Buy Recommendation on Manitok Energy common shares @ current levels for dramatic upside potential with almost zero downside risk. We believe that Manitok shares can appreciate to the .40-.50 price range during the next 6-18 months. We cannot pound the table any louder for investors to buy Manitok Energy, Inc. at levels that are just plain beyond ridiculous.
WE MAY BUY, SELL AND OR HOLD AT OUR OWN DISCRETION .We currently own 150k common shares of MKRYF
SONICS AND MATERIALS, INC. SIMA CURRENT PRICE $2.75 SEE OCT 14TH EMAIL ALERT FOR COMPLETE STORY. BELOW SEE YEAR-END RESULTS ENDING JUNE 30TH 2016.
NOTE: THIS STOCK TRADES ON THE "GRAY" MARKET
NET INCOME/SH~~~~ $.71
SHARES OUTSTANDING~3.4 MILLION
BOOK VALUE/SH~~~~~ $7.15
P/C~~~~~~~~~~~~~~44% BELOW STATED
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