Today’s new Top Pick for 2014 is a junior oil and gas company, which acquires, explores, develops and produces petroleum and natural gas reserves in Western Canada
Marquee Energy (MQL.V or SKWEF)
from S.A. Advisory
Marquee Energy is a small & rapidly growing light oil & gas exploration and production (E&P) company drilling in southern Alberta, Canada. Marquee recently purchased additional acreage production within their core “Michichi” Holdings.
The current exit estimates for 2013 are 4500 boe/d (early estimates). For 2014, the exit rate is around 5100 barrels of oil equivalent per day (boe/d). After the recent asset purchase and “flow thru”, there are 84 million shares fully diluted and outstanding. Management has issued cash flow estimates of $0.46/share or 1.6x cf/share for 2014 (a very cheap valuation).
At present p1+ p2 (net present value (NPV) 10%) equals around $254 million and exit debt for 2013 of around $64 million. At present, Marquee trades at only 1/3 Net Asset Value (NAV)—a very cheap metric. Marquee, for its size, has a huge stable of drill sites with very seasoned management. The core acreage has over 160 drill sites.
We believe that management will engage the investment community during early 2014 in order to expand market awareness in all of North America, which in our opinion, will dramatically enhance the share price.
Another cheap metric—based on Marquee’s exit rate of 4500 boe/d—is the “price/flowing barrel of only $28k/barrel. This value—when compared to its peers—indicates another example of just how cheap Marquee Energy shares are trading & just how undervalued it is.
We believe that Marquee Energy (www.marquee-energy.com) could easily double or triple from current levels—just based upon greater awareness—because of the company’s very cheap metrics. The company could also be a candidate for a “big fish” looking for cheap assets and production. If you are looking for a super cheap junior oil with huge upside potential & limited downside risk, you came to the right place.
Last year’s pick—Command Centers (CCNI)—priced around $0.21 is now around $0.40.
It’s a temp staffing company. For the 9 months, revenue was around $69 million and earnings were $0.03 net/share (would have been $0.04, except extraordinary write down). The 4th quarter is usually just as strong as the 3rd. Earnings should be $0.04 or 0.07 for 2013, with revenue of around $100 million. We believe that during the first half of 2014, CCNI will be bought out. Zack’s has it rated with a strong buy and a target of $1.00. We believe that it will be bought around $1.00. We rate CCNI with a continued strong buy rating.
William Velmer, S.A. Advisory, www.saadvisory.com, 801-272-4761, December 21, 2013