I've received a number of emails and messages on Twitter inquiring about MVW's News Release yesterday (March 21st, 2011)
So, why is this such good news?
1) Shows the company is serious about becoming a big player in the Alberta Bakken & Wiliston Basin.
2) There's very little downside. MVW acquired the 160 acre property for $160,000. GEOI and it's subsidiary G3 Operating will do the rest (Drill & Operate the well)
3) Outcome: MVW ends up with a 12.5% working interest in the well.
4) If they find oil MVW gets 12.5% of the proceeds from production. (example, at 1000 BPD MVW get's 125 BPD... that would nearly double their current production and give them an extra $3.5-5M in revenue per year... a considerable ROI on $160,000)
5) If the well comes up dry then MVW is out the $160,000 they put in for the property.
So.. What does this mean for the stock price?
My original post valued MVW's current holdings at $1.00 - $1.70 based on their land holdings and cashflow. The stock ran as high as $2.64 recently and in my opinion this was overvalued and was due to lack of supply. I expect the market to react positively to this release, but ultimately we will have to wait and see what the results from drilling are until we can define true value. The fact that their already aligning themselves with $27+ Nasdaq companies (GEOI) shows their long-term goals. I wouldn't be surprised if the stock creeps into the $3.00 range in the near future, forming stronger and stronger support levels as more and more news comes out.
What's the next Step for MVW?
If you take a look at their Corporate Presentation, they plan to Drill 4 Vertical Wells and 6 Horizontal Wells for themselves in 2011. This could mean an additional 1,200 - 1,500 BPD production. In order to accomplish this, they will need to raise more money.
This Participation well with GEOI is definitely a step in the right direction and a great sign that MVW means business. So far I couldn't be happier with this gem of a company! Please pass the message along, share it on Facebook, RE-tweet it, etc... everyone should know about this company