Sep 29, 2014 (ACCESSWIRE via COMTEX) -- New York, NY / ACCESSWIRE / September 29, 2014 / SeeThruEquity, a leading independent equity research and corporate access firm focused on smallcap and microcap public companies, today announced that it has initiated coverage on Black Ridge Oil & Gas, Inc. (OTCQB: ANFC), a growth oriented exploration and production company which targets non-operated oil and natural gas properties in the Bakken and Three Forks formation. "We are encouraged by Black Ridge's pursuit of a nonoperator business strategy with interests in 207 wells and an average working interest of only 3% per well. In addition, well costs have declined by 10% recently, and new completion designs have resulted in improving estimated ultimate recoveries by more than 50%" commented Ajay Tandon, CEO of SeeThruEquity. "We are initiating coverage with a target price of $2.53."
Additional investment highlights are as follows:
Operators' efficiency and enhanced completion design in Bakken and Three Forks
The company currently owns properties primarily in Bakken and Three Forks formations which are prolific, oil rich and estimated to have recoverable oil range between 9 billion boe to 24 billion boe. The operators' decision to down space and undertake pad drilling is directly resulting in cost reduction and thus higher returns in these two formations. The well cost has declined by 10% from $9.7 million per well in 2012 to $8.8 million per well in 2013. The enhanced completion designs such as Cemented liners, plug and perf; economically optimum levels of proppant etc lead to higher estimated ultimate recoveries (EUR). The new completion designs are seen improving EUR by more than 50%.
Exponential growth in production, positive operating cash flows and declining G&A costs
The company has increased its production at a CAGR of 119% from 22.6 Mboe in 2011 to 108.81 Mboe in 2013. Similarly, the proved reserves of the company increased from 480 Mboe in 2011 to 4,538 Mboe in 2013 at a CAGR of 207%. During 2Q2014, ANFC reported 153% and 36% growth rate in production on y-o-y and q-o-q basis, respectively. Based on its 10,000 net acres leasehold, 1,280- acres drilling units and 8 wells per drilling unit, the number of producing wells could surpass 50 in the future. Currently, only 6.40 net wells are in production and 1.8 wells are under drilling. During 2Q2014, the company realized $1.1 million in cash flow from operating activities; and general and administrative expenses reduced to $9.75 per boe, compared to $22.80/per boe in 2Q2013, a 57% decline.
Non-operator business strategy - Diversified risk and lower overhead costs
ANFC has minority interests in a number of drilling units. It conducts rigorous due diligence before making selective investments in high return projects, which have near-term development and production targets. Currently, it has interests in 207 producing wells with an average working interest of just 3% per well. Such a high level of diversification mitigates the overall risk of the business (in comparison to peers). Being a non-operator also lowers the overall cost structure of the company. The EBITDA margin of ANFC (50%) for FY2013 was above the peer group average of 45%
The report is available here: ANFC Initiation Report. SeeThruEquity is an approved equity research contributor on Thomson First Call, Capital IQ, FactSet, and Zack's. The report will also be available on these platforms.
Black Ridge Oil & Gas, Inc. is an oil and gas exploration and production company based in Minnetonka, Minnesota. Black Ridge's focus is exclusive to the Williston Basin Bakken and Three Forks trend in North Dakota and Montana. For additional information, visit the Company's website at http://www.blackridgeoil.com/.
About SeeThruEquity
SeeThruEquity is an equity research and corporate access firm focused on companies with less than $1 billion in market capitalization. The research is not paid for and is unbiased. We do not conduct any investment banking or commission based business. We are approved to contribute our research to Thomson One Analytics (First Call), Capital IQ, FactSet, Zacks and distribute our research to our database of opt-in investors. We also contribute our estimates to Thomson Estimates, the leading estimates platform on Wall Street.
