(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long ATU.V)
Ever since my first meeting with Alberta-junior Altura Energy (ATU.V, last at $0.45), I've been following the company's progress with great interest. That's because Altura has a first-class management team and board that are some of the best proven value creators in the industry and the company has been hinting at a game-changing play since May. This is a team that understands the concept of building value per share, period. Early investors have made a lot of money with independent directors Brian Lavergne (CEO of Storm Resources) and Darren Gee (CEO of Peyto) over the years, and as a result, Altura is unlikely to suffer from the "too small to fund" problem that a lot of juniors come across in the early days of production growth. For months, Altura has been teasing those following the story with comments like this one, made in May of this year:
"The Corporation has now drilled two horizontal oil wells targeting an accumulation that Altura believes to be one of the largest conventional oil pools identified in the Western Canadian Sedimentary Basin within the last 20 years. The Corporation currently has 52 sections of 100% WI land capturing a significant portion of this stratigraphically trapped Upper Mannville pool defined by nearly 700 vertical wellbore penetrations with bypassed pay."
Well, last night for the first time, Altura put some numbers to to the Leduc-Woodbend oil play (link to the new corporate slide deck here). Altura's internal estimates peg the OOIP (original oil in place) of the pool at a massive 700 million barrels, with 400 million barrels of that on lands (60 sections) captured by Altura. This is bypassed Mannville oil with enough vertical well control to allow for mapping with a high degree of confidence. Assuming 8-10% primary recovery, Altura is looking at a 32-40 million barrel opportunity... and the real kicker is that if the "waterflood potential" that Altura alludes to on its Leduc-Woodbend slide is real, that number could increase to 80-100 million barrels recoverable at a 20-25% recovery factor, which would be a reasonable target/estimate for waterflood recoveries that I've seen. Those are company-making numbers folks.