Maverick Energy Group Ltd (MKGP)

[Hubble]

small reminder from BMILES ( I hope he joins back to MKGP board )

o understand Maverick (MKGP) you must first understand how they are
diversified and structured. The Financials and Press Releases by
Maverick reveal they currently hold a 25% interest in two separate
drilling programs in West Virginia, a 12.5% interest in an unidentified
horizontal drilling program, and a 11.517% interest in a private Oil
and Gas company called Z2, the owner of the lease referred to as the
Big Foot Field. Along with the 11.517% interest in Z2, Maverick also
holds an Option to increase this interest to 24.7% by July 17th, 2007
for a cost of $1,000,000. In addition to Maverick holding an interest
in three separate drilling programs and one private company, what is
also important to note is that Maverick is the paid Operator of the Big Foot Field.

By
searching the Nevada state records, you discover Maverick itself was
once a private company. Maverick was incorporated on November 15th,
2000 which was well before it conducted a reverse merger with Pinnacle
Group Unlimited in March of 2006. Because Maverick operated as a
private company since November 2000, it is hard to determine the source
of all their revenue because all we have been made aware of are the
activities and developments that have taken place since the reverse
merger. What you can tell about this profitable company is that they
already have very strong financials for a Junior Oil and Gas Company
and that from the recent PR’s we can also see the tremendous growth
they should enjoy over the coming years.

For the period ending September 30th 2006
1. Maverick saw an increase in Revenue of 25.6% from the previous Quarter.
2. Maverick saw an increase in Net Profit of 36.2% from the previous Quarter.
3. Maverick reduced Total Liabilities by 16.1% from the previous Quarter.
4. Maverick increased Stockholder Equity by 60.2% from the previous Quarter.

Financial Data from Quarter Ending September 30th 2006
Total Revenue............................$1,173,936
Net Income................................$200,752
Total Liabilities........................$1,691,760
Stockholder Equity.....................$582,192

Financial Data from Quarter Ending June 30th 2006
Total Revenue............................$934,589
Net Income................................$147,387
Total Liabilities........................$2,016,276
Stockholder Equity.....................$363,340
http://www.pinksheets.com/quote/finance.jsp?symbol=MKGP

West Virginia
Maverick
owns a 25% interest in two drilling programs in West Virginia. During
April 2006, Maverick released they had successfully drilled four new
gas wells in West Virginia, unfortunately we don’t know how many wells
may have existed before the reverse merger if any. What we do know from
the 2006 PR is that Mavericks 25% interest in just these four wells
together will generate $200,000 annually towards Maverick. Maverick
also mentioned in the 2006 PR their intention to drill an additional 25
gas wells in which we could hear more on soon. If they were to be
successful in drilling 25 more gas wells which all produced at the rate
of the previous four, we could be looking at an additional $1,250,000
annual revenue from low cost gas wells. Keep in mind they hold 50 gas
leases in West Virginia so there seems to be potential for even more
wells to be drilled in the future.

Horizontal Drilling Program
Maverick
owns a 12.5% interest in an unidentified horizontal drilling program.
This 12.5% has been a mystery thus far as Maverick has released very
little information on this drilling program. Below I have copied the
content from a PR Released during May 2006 which gives us about the
only information we know about this 12.5% interest. From the wording of
this PR, I believe we can safely assume their already existed wells on
this mystery property and perhaps this is one of the sources of revenue
we do not know the details or potential of since the 12.5% interest in
this drilling program existed before the reverse merger. Because we
know so little about this drilling program and it’s potential, perhaps
we may be surprised sometime during 2007 as to how much potential
growth this program may offer Maverick. Their does seem to be a lot of
hidden potential here as 12.5% of 100 barrels per day at the current
price of $55 per barrel would generate revenue towards Maverick of
$250,938 per well. The big question here is how many wells are we
talking about?

”Maverick Energy is pleased to announce
that a rig has been moved on to the first lease of two Horizontal
Drilling sites. Maverick will be utilizing its proprietary Horizontal
Drilling technology to re-enter and drill horizontally on the first of
two targeted locations. Maverick has a 12.5% working interest in these
wells as well as a contract to drill two producing and one disposal
well on the target leases. Once production is established, Maverick
will become the operator of the wells. Based upon expected production
from the targeted zones, production from each well could exceed 100
barrels of oil per day.”

Z2 / The Big Foot Field
Maverick
owns an 11.517% interest in privately held Z2, the owner of the Big
Foot lease, with an option to increase this interest to 24.7% by July
17th. What is important to note here is that Maverick is the Operator
of the Big Foot Field and gets paid for doing so.

The first
thing to understand here is that Maverick holds an interest in Z2 and
not in Big Foot. Well what does this mean? What this means is that Z2
pays to develop this property and not Maverick. Well what is the
significance of that? The significance is that there is no risk to
shareholders in the way of convertible debt and such to develop this
particular field which will cost millions. The only cost to Maverick
should only be what is spent to obtain additional interests in Z2.

Currently
we have an 11.517% interest with an option to purchase an additional
13.184% in Z2 for $1,000,000. Because MKGP is already profitable, it is
possible that Maverick may pay cash from operations to complete this
option or they may elect to raise the money by the issuance of shares
or even a combination of both methods. If Maverick was to do so by the
issuance of shares at say the lower end of the most recent trading
range or say 5 cents, the dilution for this transaction would be
minimal at only 20 million shares.

A history of the Big Foot
Field was described during a 2006 interview that was conducted with CEO
James McCabe. Mr. McCabe stated in this interview the Oil Field was
previously owned by Royal Dutch Shell. Shell shut down the field during
the late 80’s during a time where oil had dropped down to a cost of $10
- $12 a barrel which made the field no longer cost effective to
operate. At the time Shell shut down the field, the existing wells were
producing at a combined rate of almost 1,000 barrels per day through
water injection.

Maverick is aggressively
developing this field as we speak. Maverick is performing both
workovers of existing wells along with drilling new proven undeveloped
wells. First I will discuss the workovers and then I will move onto the
proven undeveloped wells.

Big Foot Workovers
Currently
Maverick is performing a workover program of the existing wells with
the goal to bring the existing wells back to the rate of production
just before Shell had shut down the field. Maverick issued a PR on
January 17th, 2007 which told us the progress of the workovers and
projected that upon the completion of 22 workovers they anticipated the
field to increase production by 20% or a rate of 300 barrels a day. The
PR also stated there were 240 revenue producing wells in this field. If
that is the case, then the existing 240 wells were previously producing
approximately 250 barrels a day before any workovers had been
completed. From the information that has been revealed so far, I will
show below what I expect we will see if Maverick is to complete a
workover on the remaining 218 wells.

250 barrels per day / 240 existing revenue producing wells = 1.042 barrels per day per well

If 22 workovers is to produce a 20% increase from 250 barrels per day to 300 barrels per day then -

50 bbl's / 22 wells equals an average increase in production from each workover well of 2.273 barrels per day

2.273 increase per well + previous 1.042 bbl's per day = 3.315 average bbl's per day per workover well.

240 workovers x 3.315 barrels per day = 796 barrels per day

796 barrels per day x $55 a barrel x 365 days in a year = $15,979,700

This
rate is not quite the rate Shell was producing but there does remain
the 60 wells that are not producing and perhaps a workover is all that
is needed to bring those wells online? What makes these low production
rate wells significant is that there is not the associated cost of
drilling these wells which generally would cost in excess of one
million per well. The other thing that makes them significant is that
there are so many of them which together could generate a total of
$15,979,700 annually.

Now the $15,979,700 does not go directly
to Maverick but to Z2. The significance to Maverick is that they are
being paid to conduct the workovers, there is no cost or risk to
Maverick shareholders, and we receive 11.517% of Z2’s net earnings or
24.7% after completion of the option. No matter how you look at it, our
interest in Z2 and as the operator of Big Foot is all profitable.

A
recent report produced by MicroCap Reports had used what they stated as
a conservative figure to determine how much Maverick would generate
through Z2. MicroCap Reports speculated 50% of the revenue generated at
Big Foot would be retained as net earnings. If that is the case then –

$15,979,700
future potential x 50% = $7,989,850 net earning for Z2 of which
Mavericks portion would be at 11.517% $920,191 annually or at 24.7%
$1,973,493 annually. This should be pure profit to Maverick with no
costs associated.

Big Foot PUD’s
Though I have
shown the value in the workovers, these existing wells were already
depleted by Shell many years ago. What is of more significance and
value is the 200 PUD’s (Proven Undeveloped Properties). Maverick has
told us that the Big Foot lease also contains 200 PUD’s and MicroCap
Reports also recently told us the company plans to drill two new wells
each month.

Today on February 16th, 2007 we were informed by a
PR that the first two wells together will produce a total of 47 barrels
of oil per day which gives us an average of 23.5 barrels per day per
well. These 200 PUD’s at an average of 2 new wells per month give
Maverick tremendous upside growth value going forward. If they are to
successfully drill all 200 of these wells in say over the course of the
next 10 or 12 years, Z2 could be looking at a revenue stream of
$94,352,500 annually only from these PUD’s based off $55 per barrel.

By
using the speculative figures from MicroCaps as we did earlier on the
workovers, we can speculate what this may mean to Maverick in the
future and once again I will remind you that this is at no cost and no
risk to shareholders and actually Maverick gets paid to drill these
wells.

$94,352,500 annually x 50% = $47,176,250 net earning for
Z2 of which Mavericks portion would be at 11.517% $5,433,289 annually
or at 24.7% in they exercise the option $11,652,433 annually. This
should be pure profit to Maverick with no costs associated. I can’t
emphasize enough the significance here in the fact that this is not
revenue generated minus cost associated, this would be pure net profit
towards Maverick with no cost associated.

Big Foot Gas
The
last thing I will mention about the Big Foot Field is the gas. On Jan
19th Maverick announced that they would be bringing online a gas
gathering system. They stated that they anticipated 300MCF – 500MCF per
day. What I don’t know is if the gas is coming from all the wells or
just the two recent PUD’s. I suspect that Shell had already harvested
all the gas from the preexisting wells so I suspect the gas is coming
only from the two new wells. If that is the case then Maverick could be
looking at a significant addition to the revenue it will generate
through it’s ownership of Z2 as each of the 200 wells is drilled.

I
hope all of this information is helpful for everyone to see the value
in Maverick going forward right now. I believe Maverick has tremendous
growth opportunities at a limited cost. In my opinion this is a long
term investment only because it appears Maverick will continue to see
extensive growth both in net profit and revenue each year which should
continue to increase the value of the stock each year. Keep in mind
that for the most part much of this is speculative, some of these
projected figures may increase or decrease in the future as the company
releases more detailed information. With the information available at
this time, I have done the best I can to help us all get a glimpse of
where this company may be heading.