The Energy Report
Expert Comments: Peter Epstein, Au-Wire (8/12/13) "I've done a lot more due diligence on Zodiac Exploration Inc. and remain convinced that it offers a very compelling risk-reward proposition. The company's cash balance of $17M equates to about $0.05/share. . .Zodiac shares could trade to $0.20/share in coming months, with upside well above that over time."
The Energy Report Interview with Jim Letourneau (8/8/13) "There is a hot new play in California called the Monterey Shale. It is world-class source rock. A little company called Zodiac Exploration Inc. has a big land package in the San Joaquin Basin. It has farmed some of it out to partners, and it is getting results. It has about $13M in cash. . .Zodiac is drilling close to Bakersfield, which is an oil and gas-friendly neck of the woods. There are some big majors involved there. And once a major gets involved in a play, it helps everybody in terms of community relations." More >
The Energy Report Interview with Peter Epstein (7/25/13) "I'm very excited about Zodiac Exploration Inc., which is an example of an oversold, underfollowed, misunderstood Venture Exchange-traded stock. It's trading at $0.06/share but it's probably worth at least $0.20/share. Zodiac has zero debt and $18M in cash, equal to about $0.05/share. The company controls 78,000 net acres of highly prospective oil properties in California. In late 2012, a private company named Aera Energy LLC executed a JV with Zodiac on about 20,000 acres of Zodiac's holdings. Aera has committed to pay 100% of the cost of two vertical and two horizontal wells, which in total are expected to cost $50–60M, in order to earn a 50% interest in the 20,000 acres. This is a huge vote of confidence in Zodiac's assets and implies a valuation for Zodiac that is far greater than what the market's ascribing to it right now.
"The icing on the cake is that Zodiac has tax pools that are conservatively worth $0.04/share. Therefore, the per-share value of the company's cash and tax pools are worth considerably more than the current stock price, and investors still get 78,000 highly prospective acres for free. The recent announcement that Western Energy Production LLC is pooling 10,000 acres with Zodiac is further evidence of increased activity and interest in Zodiac's holdings. Majors in the region, including Exxon Mobil, Royal Dutch Shell, Chevron and Occidental Petroleum are well aware of Zodiac. Zodiac is in discussions with multiple parties regarding further development activities." More >
Geoff Ready, Haywood Securities (5/6/13) "Zodiac Exploration Inc. is an unconventional California oil story with high-impact potential. . .the company is lead by an experienced technical team. . .and we are initiating coverage. . .although Zodiac's play concepts are generally exploratory, we feel that the exposure to different zones and development scenarios, along with a large land base offsetting majors such as Occidental Petroleum Corp., creates a suitable alternative for investors wishing to diversify into a high-reward, oil-based exploration story." |
