Value Microcaps Junior Energy

[Bobwins]

XBOR.ob Cross Border Resources, Inc. 1.77

This is my newest energy play. I just bought a few shares this morning at 1.77.

Xbor is a result of a merger in 1/11. They have 800,000 acres in New Mexico and Texas. They are focused on the proven Permian basis and have multiple prospective fields for the Bone Spring, Abo, Yeso and Wolfberry formations. They operate under a non operator formula, controlling large amounts of land and then finding high quality partners to drill and operate the land.

This is the formula that is driving success for Sundance and I hope to replicate that success with Xbor.

Here are my reasons to buy Xbor:

1. Permian Basin is home to many top notch energy companies due to the many zones that are productive.
2. Xbor has top notch partners including Concho, Cimarex, Apache, Devon and Mewbourne. This level of partners has access to drilling and completion equipment before startups AND gets the trained crews as well.
3. Xbor has 12.5 million shares outstanding. They are trying to raise $5 million now so share count would increase to 15-16 million, depending on the share price.
4. Once the money is raised, they can proceed with their Bone Springs program, where competitors recently hit wells above 1,000bpd plus gas. They have AFE's for 12 wells with average WI% of 18%.
5. Current producer of 280boepd.
6. planning to apply for higher listing after financing.
7. 31,000 acres in Permian Basin

Here are the negatives:

1. raising money means that you could buy now and get undercut by the price of the offering
2. no liquidity....avg share volume is 8200. I have been trying to buy for a week at 1.70 and finally gave in and paid 1.77.
3. Non operator model means that no one well will make a huge difference for Xbor.
4. Lack of control of drill programs
5. Unproven that they can expand production and get recognition and trading volume from market.


Summary

Cross Border has accumulated a significant acreage in the Bone Springs play as well as several other productive Permian Basin plays. They have good partners with immediate plans to drill. Current production of ~280boepd is a good start, providing some revs while they wait to see the results of their Bone Springs program. The 12 Bone Springs wells proposed by Cimarex are scheduled for the next 12-15 month period, depending on financing. At around 18% WI and 600-1200bpd potential, Xbor should get 162bpd IP rates and average 80boepd from each well over time. These are oil heavy producers.

80 X 12 = 960bpd potential in a year plus their other drill programs. That's a big jump from 280.

The financing is key. I am waiting for a call from the underwriters to see about participating. Don't know the minimums or the proposed pricing. Overall I think this is a fairly low risk chance at a big win. Bobwins


Latest presentation:

http://www.xbres.com/documents/CBR-Corporate-Presentation.pdf

Latest drilling update:

http://finance.yahoo.com/news/Cross-Border-Resources-Inc-pz-2258959692.html?x=0&.v=1