Small cap opportunity abounds; MLRC Nat Gas pureplay !
I have traded & followed this one for a few years - love it. It was featured in Barrons a year ago as one of the two best LT Nat Gas plays - here are links & info from a couple of old posts on MLRC. These small caps have been the victims of value & small cap fund redemptions. I like the two opposite ends of the market here - small caps who have been "babies thrown out with the bath water" & the Majors, Intergrated & mini-majors.
I love MLRC here as THE small cap Nat Gas pureplay and RGO as a Crude Oil play. Putting rotation money into these today - I recommend a "Basket" of small caps and a LT hold philosophy. This one has traded with some volatility, but this is a gift here sub $4, this ran bounced off $4 to $6 strongly in December and it is a great play thru $6, $7 , or a very high upside LT hold play.
chart:
finance.yahoo.com
This is an EXPLOITATION play - not high risk "exploration" - all onshore shallow - keyword being "SHALLOW" low cost drilling.
This is the BEST small cap play I have seen in some time. - do the "DD" - here's the most recent PR:
Tuesday February 22, 12:48 pm Eastern Time
Company Press Release
SOURCE: Mallon Resources Corporation
Mallon Reports Drilling Results
DENVER, Feb. 22 /PRNewswire/ -- Mallon Resources Corporation (Nasdaq: MLRC - news) today reported that since its mid-September 1999 financing, it has drilled 26 wells and recompleted 4 wells at its East Blanco natural gas field in northwest New Mexico. Twenty of the wells are currently on production, 8 wells await completion or connection to production lines, and 1 new well and 1 recompletion were determined non-commercial. The aggregate average daily production from the 20 wells that are on production is currently approximately 8,000 mcf per day.
Each of the wells is completed in one or more of the Ojo Alamo, San Jose, Nacimiento and Pictured Cliffs Formations. Six of the new wells and 1 of the recompletions are located on the Company's La Jara Canyon acreage block, which extends the original East Blanco Field. Of the 30 wells and recompletions reported above, 6 were drilled or recompleted in 2000. The Company plans to drill or recomplete another 45 wells during 2000, to bring its total for the year to 51.
The foregoing information contains forward-looking statements and forecasts, the realization of which cannot be assured. Actual results may differ significantly from those forecast. Inaccurate geologic and engineering interpretations, the volatility of commodity prices, unbudgeted cost increases, unforeseen delays in operations, and operations that prove less successful than anticipated are risks that can significantly effect Mallon's operations. These and other risk factors that affect Mallon's business are discussed in Mallon's Annual Report.
Mallon Resources Corporation is a Denver based oil and gas exploration and production company operating primarily in the San Juan and Delaware Basins of New Mexico. Mallon's Common Stock is quoted on Nasdaq under the symbol ``MLRC.'
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Tuesday, Oct 19, 1999 11:25 AM ET
Reply # of 61798
JimL; MLRCs' equity offering is great news; per Barrons -
about a year ago in Barron's; MLRC along with MARY was listed as two of the best small cap plays on Nat Gas. The downside to MLRC was they were sitting on a huge potential gas field - which we now know they are. But, they were illiquid to institutions because of just 7 million shares outstanding... this equity offering increases liquidity; but also allows MLRC to eliminate virtually their only remaining roadblock; now that they have the cash to drill from this new financing.
They are going to build their own pipelines. This is fantastic news; as the ususal roadblock to these gas field developments is the time delay in hooking up & transmitting production.
MLRC has simultaneously solved both problems; they are doubling their drilling / Cap Ex spending next year; they paid off their old credit line in full; and now they are building their own pipelines.
All great news... the shares will add to liquidity; read the old numbers on their production growth from prior 10 Q's; the stumbling block was the cash to ramp up drilling and also the lack of pipelines to bring this production to market.
Both solved. The dilution is so minimal to the upside of their reserves multiplying that it is a total non-issue.
I have been following MLRC for over 1 1/2 years, the Barrons article last year highlighted the company and its prospects. Major players have given strong endorsements to this company. It will still be a small cap; but the possiblity for exponential growth is here.
Keep "some" of these shares in the "forget about it" drawer for a couple of years - and you'll thank me... bank on it.
$20 in 18-24 mos is very, very realistic imho. >>
*** NOTE - they cancelled the equity offering. - but, they did secure the new financing which has ramped up their drilling program.
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<<>> Mallon has identified the potential for more than 300 billion recoverable cubic feet of natural gas net to its interest on its East Blanco and La Jara Canyon acreage blocks in the Ojo Alamo, San Jose, Nacimiento and Pictured Cliffs formations. This undeveloped gas potential equals more than 3.3 times the Company's 1998 year-end proved reserves. <<
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<<Mallon Begins High Potential Gas Development Program
DENVER--(BUSINESS WIRE)--Sept. 16, 1999--Mallon Resources Corporation (Nasdaq:MLRC - news) today announced that it has begun a multi-year natural gas development program in the San Juan Basin of northwestern New Mexico. Mallon has identified the potential for more than 300 billion recoverable cubic feet of natural gas net to its interest on its East Blanco and La Jara Canyon acreage blocks in the Ojo Alamo, San Jose, Nacimiento and Pictured Cliffs formations. This undeveloped gas potential equals more than 3.3 times the Company's 1998 year-end proved reserves.
Speaking at the Dain Rauscher Wessels 1999 Energy Conference, George Mallon, chairman of the Company, said that the development program could result in the drilling of up to 250 new wells in the San Juan Basin. Mallon expects to drill or recomplete 30 wells during the balance of 1999, and at least 59 wells during 2000. Last week, Mallon reported the closing of $65.5 million of debt financings to fund the commencement of this program.
Mr. Mallon stated, ``The completion of our new financing marks a turning point for Mallon Resources. We now have the financial, operating and management resources to launch a large scale, yet relatively low risk, natural gas development program that has the potential to dramatically increase our reserves, asset value, production and cash flow over the next several years. We are embarking on one of the most exciting periods in the Company's history.'...>>
biz.yahoo.com
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biz.yahoo.com
Thursday September 9, 4:36 pm Eastern Time
Company Press Release
SOURCE: Mallon Resources Corporation
Mallon Finalizes $65.5 Million Debt Financings and Launches Aggressive San Juan Basin Gas Drilling Program...
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archive.twst.com
link above is to MLRC CEO interview with the "Wall Street Transcript".
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$12 last year; broke from $6 3/4 to $9 immediately upon the new financing news release. We are seeing tax loss selling; the stock is now at a 52 week low. Company is commencing low cost shallow "Exploitation & development" drilling project witht he funds from their long awaited financing package.
Do the "DD" - low daily volume/liquidity; but certainly worth a look for either a short term trade back to the $9 level; and/or a great long term hold given their reserve potential and aggressive drilling program just announced.
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Morgan Keegan, Inc. issued a Daily Notes Report on September 10, 1999 for Mallon Resources Corporation.
On September 10, 1999 Morgan Keegan, Inc. analyst N T Ident issued a 2 page Company Report on Mallon Resources Corporation. Report highlights: 'An OUTPERFORM rating was maintained. The company announced the completion of a debt financing arrangement that should ignite the La Jara Canyon drilling program in time for the heating program.'
Report No.: F0102334
Morgan Keegan, Inc. issued a Daily Notes Report on July 14, 1999 for Mallon Resources Corporation.
On July 14, 1999 Morgan Keegan, Inc. analyst Subash Chandra issued a 3 page Company Report on Mallon Resources Corporation. Report highlights: 'An OUTPERFORM rating was maintained with a 12-month price target of $13.'
Report No.: F0105810
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biz.yahoo.com
Steady insider buying; but most importantly - 3 exec's exercised nearly 400,000 options last month. This was a $9 stock weeks ago, $12 last year - with a $16 price target. Now, per the September release; - they have the funds to finally accelerate the development of one of the most talked about natural gas developments in the small cap industry. |
