Value Microcaps Junior Energy

[curlews]

MEI.v/MKRYF and CQE.to/CEQXF

I have been buying a bunch of MEI.v, Manitok Energy, which I think looks great both for growth and value. My favorite Canadian E&P stock is RMP.to/OEXFF (purchased thanks to the great research from Oiljack), but it has jumped recently, and has some insider selling. And I have a bunch of RMP. MEI is my second favorite, and looks more timely for buying now.

Manitok has a market cap of about 182MM FD, with only about 35MM net debt, although this will be climbing. They have 341k net acres, mostly in the Alberta Foothills area, but with 97k acres of oil prospective land near Calgary in a recent lease arrangement with Encana (the Entice Area). They have not drilled on the Encana lands yet, but they have 3D seismic data, and lots of prospects.

2013 exit production was 5550 boepd, 58% oil - and the way natural gas prices are climbing, I like that 42% gas. They are forecasting 2014 exit production at 7100 to 7500 boepd, with oil % climbing. 2013 average production was up 70% over 2012, and they predict another 50% for 2014. They are not self-funding yet. 2014 capex is planned for 101MM, with FFO of 70MM, but they have plenty of debt capacity.

Their last reported Cardium oil well from the Stolberg area of their Foothills region had an IP rate of 695 boepd of light oil, not in the class of an RMP Ante Creek well, but not bad. Their Stolberg type well has an IRR of 94% and a payout of 1.3 years.

There has been pretty steady insider buying November, December, January: http://www.canadianinsider.com/node/7?menu_tickersearch=MEI+|+Manitok+Energy

The MEI website presentation: http://www.manitokenergy.com/files/file/manitok-corporate-presentation-2014-01-014-v001-website.pdf

And here's a 48 minute narrated slide show by Trapeze Management, who own and support the stock:. It's a good presentation of the bullish case. They have a price target of 4.50, http://vimeo.com/user11443065/review/83373412/de9247c111

And the charts in a GMP securities January summary showing comparisons of juniors on several parameters shows MEI comparing very favorably to its peers on almost all characteristics, although GMP puts a price target of only 3.25 on it. http://www.investorvillage.com/uploads/8056/files/OG-CommodityPriceRevisions-01-15-14-GMP-MC.pdf

I have also been buying CQE.to as a rapidly growing producer of mainly natural gas. Looking to play the natural gas thesis, I already have BXE, and can't find anything new that I like better than CQE. It has very strong insider buying, with 11 insiders buying in December.