Silicon Investor - Zodiac Exploration V.ZEX

[Analysis] I found your post trying to find information about Mobius Resources formerly Zod...

Analysis — 1/22/2015 1:35:20 AM

I found your post trying to find information about Mobius Resources formerly Zodiac Exploration.

The duvernay shale is being drilled in 2015 by Encana (close to 1 billion dollars more in investment in 2015 - check their news releases), Chevron, Shell, Husky, Exxon and others even as oil prices have dropped significantly.
The California leases are pretty much gone and it was a real bust for the company.

Regardless Mobius has no debt and no partnerships. It is pretty much a takeover target considering it has tax pools and over 55 000 acres in the Duvernay shale of Alberta just north of the Kaybob area where all the other major operators are drilling and getting results exceeding 2000 barrels per day for a 2-4 well pad.

At the end of 2014 KUFPEC paid 1.5 billion $ for a 30% stake of Chevron's land in the Duvernay shale. It valued the Duvernay shale at just over 15 000$ per acre.

Mobius announced positive results in line with expectations with their first drill into the Duvernay. There is supposed to be a thinning of the carbonate layer which would allow them to access multiple zones and perhaps double or more the production per well compared to other wells which are already exceeding expectations. The Duvernay shale produces high quality gas, oil and condensates which appear to fetch a premium. The Duvernay shall is compared with the eagle ford shale found in Texas. But the Duvernay shale is considerably bigger than the eagle ford.

Final drill results were not released. I'm not sure why or if they are in negotiations trying to sell the company and its land position.

Do you think the company can be acquired?
I would not expect 15000$ per acre, however it could be something significant and considering the small share structure (29 million shares) the stock value can easily reach a few dollars a share because they control over 55 000 acres.

OTC: ZDEXF
TSX: mbs (the symbol changed on the TSX venture exchange.)

Let me know what you think.

[james flannigan] 1000 times your money. If ZEX 75,000 acres in the Monterey and now soon to be 7...

james flannigan — 11/6/2013 7:07:09 AM

1000 times your money.

If ZEX 75,000 acres in the Monterey and now soon to be 75,000 acres in the Durverny with the Muskwa take over closing by months end then I think the shares of ZEX are worth no less than 1000 times the current price based only on its land package. They ZEX plan to drill the new Canadian hot zone this winter in the Durverny.with the recent success of ATH Yoho and now Encana it is very likely ZEX will hit a strong couple of wells sending its shares flying if this is any indication:

ATH has 400 million shares out and trades at $6.50 making ZEX looking like a steal at this price:

Oilweek - Delving into the Duvernay

[james flannigan] Oct 29 OXY will report it progress on the Monterey: [graphic] Recs 2 Who ...

james flannigan — 10/15/2013 7:25:40 AM

Oct 29 OXY will report it progress on the Monterey:

Recs

2

Who Wins When the Next Great Oil Boom Takes Off? By Tyler Crowe | More Articles | Save For Later
October 7, 2013 | Comments (0)

With many oil sale plays in the US under development, we are getting a pretty good sense of what oil shale will mean to oil development in the US. Unless, of course, you start to talk about the Monterey shale in California. This shale play has the potential to be another came changer in the oil boom, and Occidental Petroleum (NYSE: OXY ) may be in the best position to capture value from this region.

Aside from having the largest acreage by a long shot. Investors in Occidental should care more about the Monterey than other players like Plains Exploration and Berry Petroleum (NYSE: BRY ) because it could mean so much more in terms of delivering value to the bottom line. Since Plains is now one smaller cog in mining giant Freeport McMoRan (NYSE: FCX ) and Berry is still muddled in the Linn Energy (NASDAQ: LINE ) acquisition, it's hard to see anyone other than Occidental being the best bet to play the Monterey shale. Tune into the video below where Fool.com contributors Tyler Crowe and Aimee Duffy further explain the potential of this major shale play and what it will take for players like Occidental to make this shale play profitable.

America's Energy Revolution
The Monterey shale is just another example of how shale oil is completely changing the dynamic of US oil production. For investors, though, it can be challenging to decide which companies are built to profit over the long term from this revolution. For this reason, we have put together a comprehensive look at three energy companies set to soar during this transformation in the energy industry. Let us help you discover these three companies that are spreading their wings by checking out our special free report, " 3 Stocks for the American Energy Bonanza." Simply click here and we'll give you free access to this valuable report.

[james flannigan] Stochouse suggesting ZEX is in play: Stockhouse Research: The Zodiac Exploratio...

james flannigan — 10/8/2013 7:37:43 AM

Stochouse suggesting ZEX is in play:

Stockhouse Research: The Zodiac Exploration mystery halt, Niko's fall

[james flannigan] Long Halt on ZEX. Interesting. James

james flannigan — 10/7/2013 1:43:13 PM

[james flannigan] The new law now puts ZEX in play for JV or take over: Monterey Shale open for ...

james flannigan — 9/17/2013 8:37:09 AM

The new law now puts ZEX in play for JV or take over:

Monterey Shale open for business after California doesn't ban fracking

Texas companies now have a green light to go after the Monterey Shale in California. California lawmakers symbolically cleared the way for drilling and fracking this week by passing regulations that don’t ban the process, said Tupper Hull, spokesman for the Western States Petroleum Association...

[james flannigan] The Energy Report Expert Comments: Peter Epstein, Au-Wire(8/12/13) "I've done...

james flannigan — 9/15/2013 3:16:50 PM

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."

 Zodiac Exploration Inc.

[james flannigan] Wire.com That Helped Boost Zodiac Exploration…. Friday, August 30, 2013 · Posted...

james flannigan — 8/31/2013 8:57:21 AM

Wire.com That Helped Boost Zodiac Exploration….
Friday, August 30, 2013 · Posted in Oil & Gas, OIL & Gas Companies · by Peter Epstein
It’s late Friday afternoon, before a 3-day weekend in the U.S. Stock market trading volume was quite anemic, yet Zodiac Exploration [ZEX.V / ZDEXF] had an extraordinary day with ~12 million shares traded. The stock touched a 6-month high of 12.5c per share before closing at 12c. Clearly, shareholders and new investors want to own this stock heading into September.

The following four articles from Au.Wire.com, all from within the past month, helped spark the rally in Zodiac, doubling the share from 6c per share on July 31st. These articles are among several other key news items, (articles on the Monterey shale, Stockhouse.com commentary and message board posts), that have greatly increased awareness of this mispriced, under-followed and overlooked stock.

Article 1::

Article 2:

Article 3:

Article 4:

More recently, this excellent nine-minute video interview of Zodiac’s CEO ties a lot of the pieces together.

Where Do We Go From Here?

There remain several bullish fundamental considerations for September and beyond. First, the price of oil has increased significantly, largely on July’s Syria / Egypt news. It’s important to recognize that oil produced in the San Joaquin basin commands prices closer to Brent than WTI. Brent oil is currently at ~$115 per barrel. Second, while there’s a great deal of speculation about the prospective value of Zodiac’s ~72k net acres, news coming as soon as September could provide an important valuation benchmark. Less discussed, another Farm-out or JC would further reduce the company’s cash burn rate. If Zodiac announces a new JV or Farm-out, the deal metrics (combined with the read through on the Aera Energy LLC farm-out) could add fuel to the stock price fire.

Given that I strongly believe that the Aera Energy Farm-out news was largely ignored, possibly due to overall weakness in TSX-listed stocks, the announcement of a new deal in September could validate and refocus attention on the very robust metrics of the Aera deal. Third, the coming U.S. listing of Zodiac will introduce the story to a wider and perhaps even a global audience. Finally, September is frequently a time when hedge fund managers return from summer vacations ready to deploy risk capital again, i.e. “sell in May, come back after Labor Day….”

Upside From 12c Per Share Still Dominates the Possible Downside!

The things that could hurt Zodiac’s stock price in coming months are;

1) a decline in the price of Brent oil to below $100/barrel, (currently at $115/barrel)
2) a JV or Farm-out deal deemed unattractive by the market
3) bad news from a peer in the Monterey oil shale basin and
4) bad news from Politicians or Environmentalists in the State of California regarding fracking

These ongoing risk factors are of course important to watch, but an update on the JV / Farm-out process should come before any of these potential other events. We could be just weeks away from a new deal that, (in conjunction with the Aera Energy Farm-out) could imply a valuation on 50% or more of Zodiac’s property in the thou$and$/acre. Therefore, I strongly believe it is unwise to sell Zodiac stock ahead of an update on corporate initiatives, hopefully in September. Downside risk on the stock over the next several weeks should be modest.

September COULD be Another Strong Month of Zodiac Stock Gains

However, upside in September could be dramatic. I see no reason why the stock couldn’t double again upon the announcement of a robust JV or Farm-out agreement that both validates and draws attention to the Aera Energy deal. As strong as August was for the stock, there’s ample reason to believe that September could be just as good! Remember, September trading starts on Monday in Canada and Tuesday in the U.S.

[james flannigan] The Energy Report Expert Comments: Peter Epstein, Au-Wire(8/12/13) "I've don...

james flannigan — 8/29/2013 1:22:23 PM

[james flannigan] Interview with Peter Haverson, CEO from Zodiac Exploration by Commodity-TV - Aug...

james flannigan — 8/29/2013 12:00:54 PM

Interview with Peter Haverson, CEO from Zodiac Exploration by Commodity-TV - August 2013

[james flannigan] Think about it. If Zodiac traded at $1 billion in market cap or $2.77 per share...

james flannigan — 8/26/2013 3:13:26 PM

Think about it.

If Zodiac traded at $1 billion in market cap or $2.77 per share it would still only be trading at 25 cents per brl for its 4 billion 51-101 oil in place.

There can be little doubt the majors want in on this project.

James

[james flannigan] ZEX is an oil gem: Opinion > Independent Reports > Revealed: The smallcap p...

james flannigan — 8/26/2013 7:47:29 AM

ZEX is an oil gem:

Opinion > Independent Reports > Revealed: The smallcap poised to take big...

Revealed: The smallcap poised to take big advantage of the huge Monterey Shale oil play

Keith Schaefer

3429 Reads|0 Comments|4 days ago

The biggest oil formation in the U.S. goes into production this year, and V.ZEX is right in the middle of it.
When the Bakken shale oil play really got rocking, stocks like Continental Resources Inc. ( NYSE: CLR, Stock Forum) went from $10-$100, and Brigham Exploration went from $2-$36—all in just 2-3 years.

When the Eagle Ford got rolling, stocks like PetroHawk Energy Corp. went from a few dollars to $37.

It makes me wonder what will happen to Zodiac Exploration Inc.’s ( TSX: V.ZEX, Stock Forum) when the Monterey Shale gets solved.

And I don’t think I’m going to have to wait very long to find out. A series of “tight holes” by leading industry players makes me think we’re getting close.

I’ve written before that the Monterey Shale in California actually has 60% of the technically recoverable oil in all the US—yet has no real production yet. This play is so big that it is actually twice the size of the Bakken in North Dakota and 4x the size of the Eagle Ford in Texas.

And Zodiac is the best way to gain direct exposure to the Monterey. Zodiac has some very big leverage to the biggest US shale play.

In fact, Zodiac may offer investors more barrels of oil in place per dollar of market capitalization than any other publicly traded company. It has a market capitalization of $32 million—and $17 million or five cents a share in net cash—with exposure to more than 4 Billion Barrels of oil in place. That's a great position for a micro-cap stock and a legend as its Chairman.

So how big is the Monterey? In 2011 the EIA (Energy Information Agency) released a study called “Review of Emerging Resources – U.S. Shale Gas and Shale Oil Plays”—where it named the Monterey/Santos as—by far--the largest shale oil play in the United States with over 15 billion barrels of technically recoverable oil.

Zodiac Exploration has just under 72,000 acres of prime Monterey land—that also includes a few other geologic formations with a lot of oil potential.

The industry calls that “stacked pay”, and Zodiac’s land position full of stacked pay could not be replicated today. And it’s the only publicly traded company that focuses exclusively on the Monterey zones and source rocks.

In early 2009 Zodiac identified a light oil resource opportunity in California and aggressively began locking up acreage.

Thanks to moving early and quickly, Zodiac built their land position—at bargain prices. And we know there is oil there—in the 1970’s and 1980’s adjacent wells to the Zodiac lands produced over 500,000 barrels of oil. These vertical wells also provided all kinds of useful geological data.

An independent resource report prepared on Zodiac’s Jaguar acreage—only 40,000 of their 72,000 acres--estimated mean Total Petroleum Initially-In-Place of just over 4 Billion Barrels.

The largest entire Canadian tight oil plays have the following amounts of oil in place:

Cardium 10.6 billion barrels
Viking 5.0 billion barrels
Shaunavon 3.0 billion barrels
Swan Hills 2.9 billion barrels

So Zodiac Exploration sits on as much oil as entire leading Canadian resource plays. The leverage this company has to this play is not just rare, it’s unique.

Like the Bakken and Eagle Ford were ten years ago, the Monterey today is not “development ready”. Oil producers are still trying to crack the geological code and figure out how extract oil from the play profitably.

And like the Bakken and Eagle Ford it really isn’t a matter of “if” the industry figures out the Monterey, it is a matter of “when”.

And “when” that happens, land prices in these shale plays see huge jumps—from tens to thousands of dollars per acre. At $10,000 per acre, which would be low for a successful oil resource play (Eagle Ford acreage goes for $15,000 to $25,000 per acre), Zodiac’s 71,600 acres would be worth $716 million. That is just a hair under $2 per Zodiac share. (That would be more than a 20-bagger ;-))

It has happened in every other major shale oil play in the US. And once the code is cracked, it spreads like wildfire across the play and the production increases start.

This is incredible upside potential for a company with no debt and a good chunk of cash on the balance sheet.

And back to the "when”--I have reason to believe it could be very soon.

Right next to Zodiac is Occidental Petroleum Corp. ( NYSE: OXY, Stock Forum) with 900,000 acres in the Monterey--the largest acreage position in the play. So they are highly motivated to crack the Monterey code, and they have deep enough pockets to do it.

Last year OXY discovered a 50 million barrel “unconventional” deposit in California—that’s another word for tight oil or shale oil. And on its latest conference call, OXY called it “repeatable”. They also said that most of any increased spending in California would be on unconventional plays—then allowed analysts to speculate that they could IPO their California assets some time in the near future.

Any good news out of OXY on the Monterey—and Zodiac could turn into a multi-bagger for shareholders.

Now, Zodiac is working to move the Monterey forward as well. After all, it was the juniors and intermediates who developed the Bakken—the majors came in dead last, buying everybody else after the hard work was done.

Last October, Zodiac signed a joint venture agreement with Aera Energy—one of the largest private energy companies in the USA—on 19,600 acres of Zodiac’s land in King’s County California. In exchange for 50% of those acres Aera agreed to pay 100% of the drilling for two vertical and two horizontal wells. They're attracting that kind of attention.

The first well under this program drilled through several of the stacked pays, and reached 15,000 feet--its total vertical depth--on April 29, 2013. It remains on a “tight-hole” status, where they don’t have to tell the market what they found.

Zodiac is also actively talking to several other companies interested in their acreage.

With well results still waiting to be disclosed and active discussions ongoing it is curious that Zodiac’s shares are moving. It tells me the market is expecting news.

The company has no debt and $17 million in cash in the bank ($0.05 per share). At the current share price ($0.08) that means that investors are paying all of $0.03 per share or not much more than $10 million for exposure to more than 4 Billion Barrels of oil in place.

Another positive for the company and the stock is Chairman Bob Cross. I got to know Bob ten years ago when he took over the shell that became Bankers Petroleum—for just under 1 cent a share. The company now produces 18,000 barrels a day of oil and has traded to $10.

His BKX Petroleum just ran from $0.85-$1.40 in a week. Success follows Bob likes pucks follow Wayne Gretzky.

So Zodiac’s stock is now moving up, as the Market sees the huge leverage it has to all the stacked pay in the Monterey. OXY’s big drilling plans in the Monterey—at least 15 wells and $300 million in capex--in the coming six months clearly has the Market intrigued in Zodiac.

Paying almost nothing for something that could be worth hundreds of millions of dollars is how fortunes are made. And all it is going to take is one smart petroleum engineer cracking the code on this massive play.

There is clearly big potential for Zodiac. And with several tight holes in the play, and an active drilling program by OXY, the discovery clock is ticking faster now.

Keith Schaefer is publisher of the Oil and Gas Investments Bulletin http://oilandgas-investments.com/

Zodiac Explorations' management has reviewed and sponsored this article.