Tuesday, February 7, 2017

Jericho Oil (JCO.V) to accelerate growth in 2017

Jericho Oil:


Jericho’s operating and technical team has begun its initial program aimed at reducing the decline rates within producing wells, returning idled wells to production and lessening downtime across its assets. A key portion of the Company’s acquisition thesis is that previous distressed operators have not provided the maintenance capital required to implement oil-field best practices and maintain production rates. Accordingly, the team’s effort has focused on arresting field-wide and specific well production declines through re-works, clean-outs, re-stimulations and pressure optimization on several horizontal and vertical wellbores.

In accordance with these efforts, the Company identified, multiple horizontal wells which were likely to be strong candidates for re-works due to the current lack of production contribution from many of the lateral stages. In late December, Jericho began its operating program returning a Woodford horizontal to production, as well as cleaning out and acidizing one Mississippian horizontal and one Hunton horizontal well.  In the aggregate, positive results yielded incremental run-rate gross partnership production of approximately 65 BOE per day.


Full Year 2016 gross average daily partnership production rate of approximately 800 barrels of oil equivalent (BOE) per day reflects a 182% increase from Full Year 2015 gross average daily partnership production of approximately 285 BOE per day. Jericho holds a 38% Average Working Interest in the Oklahoma partnership.

I bought the stock back in October of last year. The stock has recently broken to the upside. I think Jericho is one of the best run resource companies that I own. The management bought out smaller less capitalized operators when the oil price was half what it is now. They have also been diligent in applying capital to re-mediate and refurbish wells which is now leading to higher production at a higher price deck. Classic buy low and sell high.

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