Austin-headquartered
Victory Energy was hard at work drilling on their Texas Permian portfolio at
the end of March and they had just closed a Designated Advisor for Disclosure
deal with high-profile registered broker-dealer, Euro Pacific Capital as well,
a firm widely-known for being headed up by influential and highly publicized
economist/investment advisor, Peter Schiff. Further bolstered operationally by
the prior securing in late February of a $26.4M credit facility via Texas
Capital Bank out of Dallas, VYEY has been busy proving up more reserves to add
to their already extensive base, alongside partner Navitus Energy Group, who is
the other half of their Texas Partnership (est. 2008), Aurora Energy Partners.
The primary emphasis
for the credit facility has been partnership operating capital, as well as
providing access for VYEY to the some $10M in private placement capital
available through Navitus. This roughly $36.4M worth of muscle has been and is
going to be strenuously applied to the aggregation of additional cash-flow
focused properties or exploitation of existing acreage. As this process
progresses the new relationship with Euro Pacific will become instrumental for
market-based communications and the company’s overarching goal of listing on
the OTCQX Market.
Low-risk development
in established, predictable resource plays like the Permian, has been a big
part of the company’s rise to greater prominence and ever since acquisition of
the first 320-acre Cotter parcel at their extremely hot Lightnin’ Property back
in march of 2012 (now some 640 acres since the May 2013 acquisition of the
McCauley parcel), VYEY has been rapidly improving their performance. The
Lightnin’ is the source of VYEY’s latest drilling as well, which was detailed
in a February operations update as having seen two new wells completed since
the start of 2014 (McCauley 6 #2 and the Cotter 6 #2), with a third ready for
completion (20% WI, 18.75% NRI). Solid shows through the Fusselman,
Mississippian, and Wolfcamp formations on the Cotter 6 #2, which was being
readied for a multi-stage frac at last report, broadly underscore production
results off the McCauley 6 #2 (as well as the broader Wolfberry Trend’s
potential), which was clocking 52 BOPD on average with 58 Mcf of liquids-rich
gas since being put online in December of last year.
Lightnin’ has been a
strong highlight for VYEY since the first two wells the company drilled back
around the time of their initial purchase (Cotter #1 and McCauley #1, put on
production in late march and June 2013 respectively), with successful drilling
and completion of every well attempted thus far. Now that they have a big chunk
of capital at their disposal to make timely drilling decisions a no brainer,
markets should see an increased acceleration of VYEY’s logistical growth,
proved reserves, and overall output as this year progresses. Growth through a
combination of low-risk drilling on held properties and the acquisition of
additional proved/producing reserves in known geology, where premium 20% plus rates
of return and break-even under $65 a barrel is possible, is indeed a sound
strategy and VYEY has made several recent appointments to capitalize further on
this momentum, including the election of experienced general manager, Patrick
Barry, to the company’s Board of Directors. Some remarkable progress for an
up-and-comer like VYEY really and their recent February production update also
contained good news out of the Chapman Ranch property over in Nueces County,
which successfully flow tested its first well from the target Frio Sands during
late January, showing around 67 BOPD with 10 Mcf of dry gas on average. Great
secondary news out of a target the company actually acquired well before
shifting focus to the prolific Permian.
Year-over-year
performance comparisons from 2012 to 2013 tell the story of a fast-growing
E&P and with some $6.2M in proved reserves, as well as a roughly 2.5x
proved reserve value multiple on drilling/completion CAPEX for Permian vertical
wells (which average estimated ultimate recovery rates around 100k BOE), VYEY
now stands poised to deliver some serious shareholder upside as their scalable,
demonstrably successful strategy advances. It is also worth noting that as a
result of the Euro Pacific Capital engagement, VYEY has access to Euro
Pacific’s heavily attended and influential conferences as well. The company
will be acting as a presenter in future conferences, no doubt providing VYEY
with highly valuable access to an even wider audience of key investors.
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