Kerm / Maxx Petroleum
Gordon Capital's analyst issued an update on this stock on January 16:
Maxx Petroleum Adds to Kansas Lands, New Discovery in Saskatchewan
- Maxx has added to its land position in central Kansas in the last month. Since
December 1, 1996, the company has increased its acreage position from
11,000 gross acres (8,000 net) to 17,000 gross acres (13,000 net). Maxx has
tied up the Arnold field, as well as other smaller positions. The company is
in the process of hiring a full time landman to continue to build this position.
- Six drilling locations in Kansas have been identified. The company estimates that
it will wait about 30 days for drilling approval from the state regulators, and
then spud its first well in February. Unlike western Canada, rigs are not
in short supply in this region of the U.S. Maxx plans to bring a rig up from
Oklahoma, and drill four wells with it prior to Spring break-up
- Maxx has made a new light oil discovery in its southeast Saskatchewan core area.
The discovery is at Ingoldsby, where the company has a 65% working interest.
The field has 6.5 metres of pay zone, 260 acres of ariel extent, and is
considered to hold about 2.5 million bbls. The pool is in the Frobisher (Mississippian)
formation. A second well will be drilled into this pool February.
- Under our recently revised commodity price forecast, we are now
projecting CFPS of $0.75 for 1997 and a preliminary $0.85 for 1998. This
forecast does not assume any drilling success on the Kansas project.
- Maxx is now trading at a ridiculously low price\cash flow multiple of 2.9x
1997 CF. We reiterate our BUY at this time, and are increasing our 12 month
stock price target from $3.50 to $4.00. [The stock was trading at $2.15 when
this was written -- last trade this morning was $2.50. The multiple is 3.3x
today]
NOTE: Gordon Capital Corporation has participated in an underwriting or
acted as financial advisor for Maxx Petroleum within the last 12 months.
KERM: There is also a more lengthy report on Maxx, published on November 22.
Also included in this booklet are reports on Blue Range, Dorset, Encal, Highridge,
Rio Alto, Tri Link and Ulster. Since its two months old it's past the point of posting,
but if you would like I can mail it to you. |
