MCF Energy (MCF.V) is a tiny Canadian energy company with a market capitalization of about CDN$60 million or so. It has no debt and produces no oil or gas right now. With about 222 million shares outstanding currently trading at CDN$0.30 per share (plus or minus) you might wonder what there is to be excited about.
Fair point.
On March 18, 2024 MCF disclosed a significant gas discovery in Austria. Like most of Europe that relies on Russian natural gas or LNG imports, a major gas fine in central Europe is likely to find a market.
How significant is it? At this point we don’t know. But the blue chip board and management team have a pedigree, and the company’s interests in natural gas plays in Germany and Austria point to plenty of opportunity. According to the company’s website disclosure, the resources in their acreage amount to some 700 Bcf of gas and condensate. For comparison, 700 Bcf is about equal to one year’s natural gas output from Tourmaline Oil (TOU.TO) and at European prices for natural gas a market value of somewhere around CDN$7 billion. I have no idea about costs since it is far too early to do any economic analysis of the MCF holdings beyond guesswork. Assuming these “resources” can be successfully put into production and a reserve life of (say) 10 years, MCF would have annual revenue from the once-developed resources somewhere around CDN$700 million.
It is a bit nonsensical to go further down the road of heaping speculation on top of speculation, but to me it seems clear that a successful MCF might be worth more than CDN$60 million and that a series of dry holes would consume the company’s capital and the shares could well be worthless.
Management is impressive. Co-founder Ford Nicholson was also a co-founder of Bankers Petroleum (I made a mittful on that company when it was taken over). CEO Jeff Hill has a long history of success in the European oil & gas industry. Director Wesley Clark was Supreme Allied Commander of NATO for over a decade. Investor Frank Giustra was a founder of Wheaton River Minerals.
I learned from the late Ben Webster, a prominent Toronto-based venture capitalist who gave me my start when he helped fund The Enfield Corporation Limited (“Enfield”) I founded in 1984, that good outcomes result from backing the right people more than the right assets. Ben invested $100,000 in Enfield common equity in April 1984 and sold that holding for $42 million three years later. I was proud to be one of those Ben thought was one of the “right people”.
MCF at this point is outright speculation. I bought 50,000 shares at CDN$0.30 per share. I will revisit this bet in a year’s time and see if Ben’s advice pays off in this case.
Thanks. Stumbled across it as well on oilprice.com
https://oilprice.com/Energy/Energy-General/This-Could-Be-A-Gamechanger-For-Natural-Gas-In-Europe.html
I had looked at it a few months ago and it does have possibilities, another small company operating in Europe is TNZ - TENAZ ENERGY CORP. The principals are all ex BTE and VTE, including the guy who was CEO of both. I have sold my tnz position a couple of months ago.
Michael, BTW I was at Pearl Harbour Air exhibit a couple of days ago, the have a 104 there, made me think of you. Great shape, its pretty small compared to the Phantom nearby... I was also surprised how small a MIG15 was sitting next to a F86, Im a little younger than you, but recall in public school the F86's coming in low over my school yard landing at Cartierville :)