Saturday, October 11, 2014

Mart Resources new pipeline is ready to go


Mart Resources ( released a corporate update this morning with details on the Umugini pipeline as well as a drilling update. Mart is a junior oil producer in Nigeria with current production of 7,874 bopd (August). Management says the completion of the Umugini pipeline could potentially double current production.


This is significant news for Mart shareholders as once this pipeline is running at full capacity it will double current production and help limit line loss to ~8%. Mart has had significant problems with its previous pipeline including line loss rates of up to >20% of oil flowing through the pipeline due to theft. The old pipeline also required on average several days of downtime per month for maintenance and repairs.

Mart is also currently drilling and has completed well UMU-12 which will undergo clean up and testing of a 40 foot oil column. The rig is being moved to a new location to drill UMU-13, an exploration well.

Mart Resources is one of the stocks in my speculative portfolio. The news about this pipeline is the catalyst we were waiting for to move the stock. With oil prices pulling back and the Ebola scare in West Africa the shares are down. Nevertheless production will double and assuming oil prices do not crash, I don't think they will, then the share price will move higher as higher volumes move through the pipeline. Pretty simple thesis, now lets see if the company can execute. This recent pullback could give people who did not buy earlier another bite at the apple.

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