Osage Exploration and Development Inc. (OTCBB: OEDV) may be a microcap oil and gas company trading on the OTCBB, but its positive cash flows and promising development opportunities make it more akin to an early-stage Nexen Inc. (TSE: NXY) or TOTAL SA (NYSE: TOT). By capturing unrecognized value in select oil and gas assets, the company has positioned itself to consistently grow shareholder value.
Key Highlights
- Positive Cash Flow. Osage reported free cash flow of nearly $3 million last quarter from its Colombian property and pipeline.
- Enormous Potential. Osage has acquired more than 10,000 acres of strategically-located property in Oklahoma that holds enormous potential.
- Significantly Undervalued. With a market capitalization of just $23 million, Osage appears significantly undervalued given its cash flow and potential.
Strong Backbone from Colombian Property
Osage Exploration and Development is a rare microcap oil and gas company with positive cash flows and promising prospects. Through a partnership with Pacific Rubiales Energy (TSE: PRE), the company produces approximately 550 barrels per day from its Guaduas Field and owns a stake in the Guaduas-La Dorada oil pipeline that has a tariff of about $1.705 per barrel and a capacity of 35,000 bpd.
During the quarter ended June 30, 2011, the company generated revenues that increased 157% to $962,450 and net income that reached $2,768,120, or six cents per share. Meanwhile, the firm’s balance sheet showed a current ratio of 3.29 with more than $3.2 million in cash and cash equivalents. Finally, the company’s free cash flow jumped nearly $3 million during that quarter alone.
“Company Maker” Potential in Oklahoma
Osage Exploration and Development may have a strong backdrop in Colombia, but its real potential lies in Oklahoma. Well-known in the oil and gas sector for its large net pay, the state houses some of the most economic oil plays on the planet. The company has acquired numerous oil and gas leases in the region targeting the Mississippi formation.
Earlier this year, the company entered into an agreement with Slawson and USE to acquire 45% and 30%, respectively, or their 10,000 acre Nemaha Ridge property for $4,875,000. With these companies in place as operators, the firm could see production as early as next year. The economics of the region suggest that this production could be upwards of 16 million barrels.
A Great Investment Opportunity
Osage Exploration and Development Inc. (OTCBB: OEDV) currently trades with a market capitalization of just $23 million, which pales in comparison to its vast potential in Oklahoma. Meanwhile, the positive cash flows from its Colombian operations should help fund the development of these properties and curb any potential dilution for existing shareholders. As a result, this is one stock worth considering.
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