NAGP: Now producing oil from two wells - Increasing
price target to $2 a share
Ian Gilson, CFA
Native American Energy Group (
is now producing oil from the Wright 5-35 and Beery 2-24 oil wells
in the Williston Basin in Montana. The company's field staff and
contractors have completed the electrical system repairs and
upgrades to surface equipment and subsurface flow-lines.
The Wright well initially flowed oil at 83 bbl/day but settled down
to a 53 bbl/day rate. Fluids in the well are being pumped out (both
oil and water) and when that is finished it is expected that the
mixture will then settle down to about 50% oil.
The Beery well is now flowing at between 8 to 10 barrels of oil a
day with a variable choke at 47 psi. The choke will be adjusted to
stabilize the pressure and produce oil continuously. When that is
done the flow rate should increase.
The two wells combined should exceed our estimate of an average of
53 bbl/d for the December, 2012 quarter. West Texas Intermediate
(WTI) has been selling at between $90 and $100 a bbl over the past
few weeks. Assuming a $10 a bbl discount to WTI the price received
should exceed our $75 target.
Oil demand continues to increase. In the first nine months of 2012
the weekly traffic of major North American (US; Canadian and
Mexican) railroads show a Y/Y increase of petroleum products of
35.5% (42% in the US) and a decline in coal shipments by 8.6% (down
9.6% in the US)
Given the encouraging news and the high probability that we will be
increasing our estimates we have increased our target price to
$2.00 a share.
Please visit Ian Gilson's coverage page at
to access a free copy of the full research report.
NATIVE AMER EGY (NAGP): Free Stock Analysis
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