Mira Resources

The Pontiac

Listed on TSX Venture Exchange (MRP.V). Market Cap $28.5m. Current share price 21c.

Mira's main interest is the Tom Shot Bank field - shallow offshore Eastern Nigeria.

Mira released results from the TSB-1 well in December and a reserve report is due this month. A recent Jennings report stated "Mira’s share might be 13.5 MMBbl or more, vs. the 4.2 MMBbl previously assigned."

Mira also plans to drill the TSB-3 well in Q1 this year, which should prove up more reserves, and then build the facilities required to commence production.

The Tom Shot Bank field was first discovered by Shell in 1980 and is classed as a marginal field. Other marginal fields in the region have proved to be hugely successful and profitable. Ebok Marginal Field, which is operated by Afren PLC, originally had an estimated 20 mmbbl of oil in place and is now reported to contain in excess of 102 mmbbl of recoverable resources. Mart Resources which also acquired the Umusadege Marginal field in Nigeria, which is seemingly smaller than Tom Shot Bank, have a market cap today of $300m. The OML 123 field, operated by Addax Petroleum, is situated directly south east of OML 14 which contains the Tom Shot Bank Field.Using recently acquired 3D seismic including a pre-stack depth migration (PSDM), Addax concluded that using horizontal drilling on the Greater Ebughu structure contained over 250 mmbbl of recoverable reserves, 10 times greater than previous estimates. Mira has identified additional prospects and leads which have not yet been evaluated by NSAI with prospective resource potential in excess of 100 mmbbl.

The main problem for Mira, like so many other small-cap oil companies, is financing. Looking at the market cap and asset value it looks incredibly cheap. The estimated cost of drilling the TSB-3 and build the facilities required to commence production is $55m. A farm-down is also an option.

The company's CEO, Johnathan More, has been buying heavily on the open market (will post below) this past few weeks and management are participating in the $3.5m private placement announced last Monday. This gives me huge confidence that a highly dilutive equity placing is not on the cards.

I'm a buyer at these levels.

The Pontiac

This is the whole insider buy list from June onwards
As of 11:59pm ET December 26th, 2011
Filing
Date Transaction
Date Insider Name Ownership
Type Securities Nature of transaction # or value acquired or disposed of Unit
Price
Dec 23/11 Dec 23/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 50,000 $0.145
Dec 15/11 Dec 13/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 10,000 $0.140
Dec 15/11 Dec 13/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 20,000 $0.145
Dec 15/11 Dec 13/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 10,000 $0.148
Dec 13/11 Dec 13/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 129,500 $0.145
Dec 9/11 Dec 9/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 100,000 $0.160
Dec 9/11 Dec 8/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 50,000 $0.160
Dec 9/11 Dec 8/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 200,000 $0.165
Dec 9/11 Dec 8/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 75,000 $0.175
Dec 8/11 Dec 7/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 122,000 $0.170
Dec 8/11 Dec 7/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 3,000 $0.165
Dec 7/11 Dec 6/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 65,000 $0.120
Dec 7/11 Dec 6/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 125,000 $0.130
Dec 7/11 Dec 5/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 165,500 $0.115
Oct 25/11 Oct 25/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 5,000 $0.275
Oct 25/11 Oct 25/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 55,000 $0.270
Sep 29/11 Sep 29/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 345,000 $0.270
Sep 28/11 Sep 26/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 5,000 $0.290
Sep 20/11 Sep 20/11 Cavanagh, Thomas Direct Ownership Options 50 - Grant of options 500,000 $0.400
Aug 31/11 Aug 31/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 200,000 $0.325
Aug 30/11 Aug 30/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 170,000 $0.320
Jul 21/11 Jul 20/11 Asibelua, Mohammed Direct Ownership Options 00 - Opening Balance-Initial SEDI Report
Jul 6/11 Jul 5/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 10,000 $0.320
Jul 6/11 Jul 5/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 2,500 $0.300
Jun 30/11 Jun 29/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 5,000 $0.280
Jun 30/11 Jun 29/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 4,000 $0.300
Jun 30/11 Jun 29/11 More, Johnathan Direct Ownership Common Shares 10 - Acquisition in the public market 1,000 $0.290

The Pontiac

Hit 30c tonight.

Hope we're all happy with the 50% gain since the thread started.

turbobaby

Fair play Ollie.

I reckon the mention of Nigeria would instantly turn people off (myself included) so well done for taking on the risk.

I received a recommendation of Mart resources at 55c (another Nigerian oil producer), it soon went above $1 and has dropped back a little to around 88c after some of their oil was nicked direct from the pipe....

It's bandit country there, but most of the time it seems the banditry is priced in.

Again, nicely done with the share pick. Hope you can share more. Incidentily, did you have a look into HRT Participacoes?

The Pontiac

Cheers turobaby.

I was keeping an eye on the Nigerian junior producers/explorers during the recent turmoil in the region, and it had absolutely no effect on the share price. In fact most were rising, bizarrely. But no doubt Nigeria does hold the obvious political risks.

Mart Resources is an example of how profitable these marginal fields can be, and turnover is what the markets wants. Mart are capable of producing a lot more oil if/when the right infrastructure is in place. The majors will not qualify for the favourable tax breaks for these fields, and technical foreign partners (Mira, Mart etc) can only own a certain stake in the field.

Mira's management are investing heavy here. The chairman recently invested $4m.

The other Nigerian oiler I'm watching is Sirius Petroleum (listed in London). They have a 40% stake in the Ororo Marginal Field, first discovered in 1986.

The Ororo-1 well tested at c. 2,200 barrels of oil per day (bopd) from a single zone, and ca 600 bopd from another; two further zones tested gas, and eight zones remain untested. The recoverable hydrocarbons were most recently estimated to be in excess of 20 million barrels gross in a third party report prepared in 2006, which will be the subject of verification by the Competent Person (consultant) to be mandated by Sirius to produce a CPR;
The closest producing fields are Mina, Isan, and West Isan, all of which are operated by Chevron and are situated between 4km and 6km from Ororo providing a low cost tie-in opportunity;

The CPR is due this month. This field is already proven and Sirius have the funds in place ($80m from Corvus Capital). Worth keeping an eye on Sirius.

I was indeed looking at HRT Participacoes. I seriously thought about investing when you started the thread, but kept waiting on other Canadian stocks to come to fruition as I didn't want to convert currency (td waterhouse charges). The share price is now $3.58. It was only $2.24 when you started the thread, so I'd feel a bit píssed buying in now. Not saying I missed the boat or anything, as it seems to be on a bull-run, just the fact I could have/ nearly bought a lot lower. You seemed to have picked a winner there. Well done. I might buy in yet though...

turbobaby

Excellent stuff Ollie. Will keep my eye on the stocks you listed, but can't see myself selling any HRP for the foreseeable future. It's very true what you say about Mart being limited by the infrastructure there.

I know exactly what you mean re TD Waterhouse and their FX charges. Pretty horrific commission.

When you are transferring cash into TD, I suggest you use a service like transfermate.ie if you plan to buy non euro stocks. Transfermate's exchange rates are far better.

The Pontiac

Cheers turbobaby! Will use Transfermate in the future..

Nice rise in HTP again tonight, I see.

turbobaby

Just make sure you stress the need for Transfermate to include your account number as the bank transfer reference. I think they go through an intermediary cos on a couple of occassions they didn't put my reference number in correctly.

I was forced to get on to TD directly. No harm, just a little delay, but well worth it for the savings.

The Pontiac

Will do that, cheers.

Absolutely hate paying the Td Waterhouse fees. Pure rip-off merchants.

The Pontiac

Sold these tonight buy Mart Resources.

A bit tired to do a write up of Mart, but here is an extract from an interview with Chin Lin from a few weeks ago, which gives a nice summary. Worth remembering they released a good news release since then too..

TER: Are you currently trading out of equities that have greatly appreciated since the beginning of 2012?

CL: No, I am not. Well, some stocks I have, but mostly I've stayed with what I'm holding. I believe this rally still has legs. My largest position is Mart Resources Inc. (MMT:TSX.V), and my second largest is Pan Orient Energy Corp. (POE:TSX.V). Although I've been mentioning them in my newsletter for quite some time, I am still holding and riding those two stocks. I believe they are still very much undervalued.

TER: You've written that you're expecting some big news from Mart pretty soon.

CL: I'm hoping the company can deliver a dividend. Its cash has been increasing dramatically in the past few months. It's going after light sweet oil in Nigeria and selling it at a premium to Brent crude, so the company has a lot of free cash flow. The money is just piling up on its balance sheet, and I expect that to continue for the rest of the year. It's pretty amazing that only two years ago the company was close to bankruptcy. Since then, it has just changed dramatically, and I don't think it is appreciated by the market. I'm still very optimistic about the company and holding my position.

TER: Mart Resources has given back about 6% over the past month. Is this a buying opportunity?

CL: I think so. If you compare the valuation of Mart to other companies in the space, seldom do you see a company trading potentially at one or two times this year's cash flow. Potentially, it could more than double its cash flow next year because it is finding more and more oil. Every well has been great in the past two years. That's very unusual for a junior company. In addition, its wells have no decline. That's something that amazes me because if you look at nearly all energy companies, you're looking at very sharp declines in the first three to six months.

TER: Is there no sign at all of depletion? This huge oil field just continues to keep producing?

CL: That's the thing. My guess is that it is sitting on a huge oil pool that's interconnected and extends over a very big range. Once it pumps oil out, still more oil flows to the area, and so there's no decline. This type of well is very hard to find on earth except in Saudi Arabia and a few other countries.

TER: So, Mart is producing oil that gives the company a marketing advantage because light-sweet refinement is low cost and therefore commands a premium price to Brent crude. Plus, depletion is not notable yet. What am I missing? I'm sure the picture can't be this bright.

CL: Exactly. Well, the issue is Nigeria. It is a country where there are frequent protests and attacks on the pipelines. But those conflicts are mostly in the north, whereas Mart operates in the south, near the coast. So it's pretty far away from the major violence. There is still tremendous opportunity and tremendous cash flow for this company. I think this will be the year when people see a dramatic rise in cash on its balance sheet and hopefully, with all that cash, it can pay dividends and bring in more rigs. It will build a pipeline and do everything organically without coming back to the market. That's the beauty of this.

http://www.theenergyreport.com/pub/na/12647

The Pontiac

Can't believe Mira is after hitting 37c before Resource Assessment is even released . Sold out way too early.

Grecco

<Ollie> wrote: »

Sold these tonight buy Mart Resources.

Whats the story with Mart Resources, I was going to invest a while back, has anything changed as they are down around 89cent now ??

The Pontiac

Grecco wrote: »

Whats the story with Mart Resources, I was going to invest a while back, has anything changed as they are down around 89cent now ??

I sold out a while back for a small profit. Not holding any equities now, 100% cash. Horrible markets and not for me as I favor speculative oil stocks.

Nothing has changed for Mart afaik, just the drop in crude and general market fears re. Greece, Spanish banks etc.etc.

Mart are generating lots of cash and increasing reserves all the time. 5,000 bopd (Net end of 2011) and new pipeline due to come on stream soon. "The upgrade of the central production facility at the Umusadege field to a design capacity of approximately 30,000 bopd (Gross) is approximately 75% completed."

Net income for the year ended December 31, 2011 totaled $71.8 million ($0.214 per share).

Even I'm tempted at circa 90c..

The Pontiac

MMT hit a low of 81c tonight. Not sure what the ask was at the time, but I'd consider getting in here at low 80's, even in these markets.

As my post above MMT are generating lots of cash, reserves are growing, with production due to increase significantly.

Truly frightening markets at present though; so if investing in an small cap oil co., make sure they are producing and have a positive cash flow with reserves booked. Only buy at a low price, and even then it's still high risk.

The Spanish banking crisis is a lot more worrying than the Greek circus. The whole markets could come tumbling down. Lehman Bros MK2, only worse.

Grecco

Buying shares at the moment is a lot like trying to catch falling knifes!!
Anyway I have cash ready to buy in to a number of shares I`ve been tracking for a while but I`ll wait till I`m sure its turning so I will miss the bottom but at least I wont get stung

The Pontiac

+1 Grecco.

Good article on Euro events here.. http://www.guardian.co.uk/global/2012/may/16/cost-greek-exit-euro-emerges?CMP=twt_fd

I'm sure the Irish government are "making urgent preparations" also. Good to hear senior British politicians speaking the truth.

Grecco

Took a plunge with Mart this afternoon @ $0.85
I`m hoping that the selling is finish with here as the volumes have tightened up but who knows :rolleyes:

The Pontiac

Grecco wrote: »

Took a plunge with Mart this afternoon @ $0.85
I`m hoping that the selling is finish with here as the volumes have tightened up but who knows :rolleyes:

Are you still holding Mart? Up 27% today, now $1.34. Crikey

Grecco

Yeah still holding, wish I`d bought more as my gains here have been wiped out by Max petroleum last week. Might take profits and try and double down on Max, but I`ll wait another week to see how there financial situation plus its easy get caught in these markets. I just don`t want to be locked into anymore shares. (The list is getting long now) :rolleyes:

Grecco

Offloaded just over half my Mart resources shares today leaving me with the other half for free
Now since the euro is so crap against every other currency including the Canadian dollar I`m going to leave the funds in Canadian. Now I need to go and research some other Canadian stocks and see can I double up again!!.......