EQS has been strategically expanding its net acreage and reserves in the Bakken region which has recently witnessed acquisition activity
Equus Subsidiary Morgan E&P Completes Two Horizontal Wells Combining for over 1000 Barrels a day
With over 54% insider ownership, EQS demonstrates a high level of confidence from its management team
EQS has an incredibly low float of less than 7 million shares available
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Hello Everyone
Oil prices have experienced a surge recently, demonstrating significant growth from mid-December highs, driven by a combination of factors that are impacting both supply and demand.
One of the primary drivers behind the recent increase in oil prices is the faster-than-expected growth of the U.S. economy in the last quarter of the year.
U.S. economic data has revealed robust growth, signaling increased demand for oil and energy resources. This positive demand indicator has contributed to the upward pressure on oil prices.
We are seeing other factors impact the price of oil on a global state. We always have Geopolitical Tensions in the Middle East including whats going on with the Houthis rebels in the Red Sea right now. We saw a Ukrainian Drone Attack on a Russian Oil Refinery a few months back that further contributes to instability.
Couple that with a larger-than-expected drawdown in crude oil inventories, primarily attributed to extreme cold weather conditions, and we have several factors that have all contributed to a recent surge in oil prices as we just saw them break a 5 month high.
We want you to pull up EQS immediately and start your research.
3 Key Reasons Why Equus Total Return, Inc. (NYSE: EQS) Could Become A Near Term Breakout Target
1. Ultra-Low Float Situation
With an incredibly low float of less than 7Mn shares available, Equus Total Return, Inc. (NYSE: EQS) is in a unique position. Such scarcity can lead to significantly volatile swings, making it very important to keep a close eye on this one.
2. Strategic Expansion
Amidst the recent surge in oil prices, Morgan E&P, a subsidiary of Equus Total Return, Inc. (NYSE: EQS), has been strategically expanding its net acreage and reserves in the Bakken region which has recently witnessed acquisition activity. This expansion signifies a commitment to growth and adds depth to the company’s potential.
3. Strong Insider Ownership
With over 54% insider ownership, Equus Total Return, Inc. (NYSE: EQS) demonstrates a high level of confidence from its management team. Such insider interest aligns their success with that of other shareholders, providing transparency and potential for long-term growth.
Equus Subsidiary Morgan E&P Completes Two Horizontal Wells
- Completes Sale of Wellbore Working Interest For $5.6 Million
- Gross Oil Production Over 1,000 Barrels Per Day
HOUSTON, Feb. 13, 2024 (GLOBE NEWSWIRE) — Equus Total Return, Inc. (NYSE: EQS) (“Equus”) today announced that Morgan E&P, LLC (“Morgan”), a wholly-owned subsidiary of Equus, has completed its first two wells in Billings County, North Dakota, the Baranko 1-28H and the Obrigewitch 1-33H. Morgan received its drilling permits from the North Dakota Industrial Commission (“NDIC”) in September 2023 and successfully completed drilling in October. Both wells, along with construction of production facilities, were completed by the end of November.Morgan drilled both wells into their target zones of the Middle Bakken, with the Baranko achieving a total depth of 19,920 feet and the Obrigewitch achieving a total depth of 21,356 feet. The wells were completed with 60-stage fracture stimulations.The wells began flowback procedures on December 3, 2023. To accelerate the flowback process, Electronic Submersible Pumps (ESPs) were installed in the wells. The installation was completed on January 26, 2024. The ESPs are still removing water used to fracture the formation, resulting in an increasing oil cut. Currently, the two wells are producing at a combined rate over 1,000 barrels of oil per day. Morgan anticipates further increases as the wells continue flowback for the next few weeks. Morgan expects to publish its initial IP 30 rate towards the end of Q1 2024.Morgan has completed a Purchase and Sale Agreement (“PSA”) for the divestiture of certain of its working interests to Bakken Partners I, LLC (“BPI”) in the amount of $5.6 million. The sale of working interests provides BPI an average of approximately 37% working interest prior to royalty and other working interest burdens and operating expenses in these first two horizontal wells. The proceeds will be utilized for past and future capital expenditures related to the drilling and completion of Morgan’s first two wells. This will reduce the overall capital expenditure for Morgan.The PSA provides BPI with an option to participate up to 15.0% in future wells, within the first two Drilling Space Units (“DSUs”) only, upon Morgan’s election to drill additional wells in these DSUs.
Equus Subsidiary Morgan E&P Provides Update on Reserves
Certified Proven Reserve PV10 Value Up 135%
HOUSTON, Feb. 14, 2024 (GLOBE NEWSWIRE) — Equus Total Return, Inc. (NYSE: EQS) (“Equus”) today announced that its wholly-owned subsidiary Morgan E&P, LLC (“Morgan”), has received from Cawley, Gillespie & Associates, Inc. (“CG&A”) an updated reserve estimate as of January 1, 2024.
Morgan continues to acquire mineral rights in the Bakken/Three Forks formation in the Williston Basin of North Dakota, and on December 18, 2023, announced an increase in its acreage in this area from 4,747.52 net acres to 5,976.84 net acres, an increase of 1,229.32 net acres, or approximately 25.9%.
Morgan engaged the petroleum engineering firm of CG&A to review and provide an updated reserve analysis of this asset using the December 29, 2023 NYMEX strip pricing.
Using a discount rate of 10% (PV10 Valuation) the values of proved, probable, and possible reserves associated with the project are $31,986,856, $13,898,074, and $62,025,104, respectively.
The most notable change in the reserve report is the conversion of possible reserves into proved developed producing (“PDP”) reserves of $27,359,924, resulting from the successful completion of the two previously announced wells, the Baranko 1-28H and the Obrigewitch 1-33H. Morgan drilled both wells into their target zones of the Middle Bakken with the Baranko achieving a total depth of 19,920 feet and the Obrigewitch achieving a total depth of 21,356 feet. The wells were completed with 60-stage fracture stimulations. Both wells are currently in flowback.
Using a discount rate of 10% (PV10 Valuation) the value of proved reserves increased 135% from the previously announced $13,575,442 million of proved undeveloped (“PUD”) reserves to $31,986,856 million, of which $27,359,924 million is PDP and $4,626,930 million is PUD.
CG&A continues to confirm forty-six (46) gross drilling locations, in addition to the two wells already drilled. They have increased Morgan’s net drilling locations from fifteen (15) to eighteen (18). As additional net acreage and working interests are acquired, the resulting number of net drilling locations is expected to increase accordingly. Neither CG&A nor Morgan can guarantee any amounts that may be recoverable from these properties. Based on a historical analysis of the geologic strata that are the subject of Morgan’s development rights CG&A has noted the estimated ultimate recovery (“EUR”) from a single well is expected to be approximately 814,000 barrels of oil equivalent.
Equus Total Return, Inc. (NYSE: EQS): Transitioning from BDC to an Operating Company
Understanding Equus Total Return, Inc. as a BDC
Equus Total Return, Inc. (NYSE: EQS) operates as a Business Development Company (BDC), specializing in in-vest-ments in privately owned, small- and medium-sized enterprises. BDCs like Equus provide access to private market opp’s and offer liquidity, making them attractive to track.
Advantages of BDCs
BDCs offer advantages such as access to private companies, enhanced liquidity, and transparency due to their regulated nature. Equus, along with its subsidiary, Morgan E&P, LLC, has been actively expanding in the Bakken region, demonstrating growth potential.
Seeking to Transform Equus into an Operating Company
Equus Total Return, Inc. (NYSE: EQS) plans to shift from its BDC status to become an operating company, unlocking various benefits:
- Growth opp’s through acquisitions and organic growth.
- Lower compliance costs as a percentage of assets.
- Flexibility in issuing equity and other securities.
- Streamlined related party transactions.
- Enhanced compensation packages.
- Expanded in-vest-ment options.
Anticipated Timeline
Equus Total Return, Inc. (NYSE: EQS) is actively evaluating merger and acquisition candidates and transaction structures.
After securing shareholder approval, they will actively pursue the transformation into an operating company, with the timeline contingent on meeting necessary conditions.
Equus Total Return, Inc. (NYSE: EQS) is on the path to transition from a BDC to an operating company, aiming to provide enhanced growth opp’s and benefits for both the company and its shareholders.
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And here’s the potential catalysts to focus on right now…
#1. Equus Total Return, Inc. (NYSE: EQS)’s Ultra-Low Float Needs Your Immediate Attention!
Finviz was reporting EQS to have a float of fewer than 7Mn shares.
Why is this important? One word: Volatility.
When a profile has a float this small, volatility can create an environment for explosive intraday and short term chart moves.
This environment will typically need another catalyst, like company news, whether good or bad, to spark a move.
Which is why it’s important to look out for stuff like this…
#2. Equus Total Return, Inc. (NYSE: EQS) Subsidiary, Morgan E&P, Expands in the Bakken – A Closer Look.
Equus Total Return, Inc. (NYSE: EQS) and its wholly-owned subsidiary, Morgan E&P, LLC, have recently made significant strides in their exploration and production endeavors within the Bakken/Three Forks formation in the Williston Basin of North Dakota.
This expansion comes as part of Equus Total Return, Inc. (NYSE: EQS)’s ongoing efforts to enhance its presence in the oil and gas industry.
Morgan E&P’s Acreage Expansion
Morgan E&P, LLC, a subsidiary of Equus, has demonstrated its commitment to growth by strategically acquiring additional mineral rights in the Bakken region.
The company has expanded its net acreage from 4,747.52 to 5,976.84, marking an impressive increase of 1,229.32 net acres, approximately 25.9% growth.
This expansion reflects Morgan E&P’s confidence in the potential of the Bakken/Three Forks formation as a valuable asset in their portfolio.
To further bolster their efforts in the Bakken, Morgan E&P engaged the expertise of the petroleum engineering firm, Cawley, Gillespie & Associates, Inc. (CG&A), to conduct a comprehensive reserve analysis.
The evaluation utilized the November 30th, 2023 NYMEX strip pricing and applied a discount rate of 10% (PV 10 Valuation).
The results have been remarkable, with proved undeveloped, probable, and possible reserves values reaching $13+Mn, $30+Mn, and $71+Mn, respectively.
CG&A’s analysis has also reaffirmed the presence of forty-eight (48) gross drilling locations, with an increase in Morgan’s net drilling locations from fifteen (15) to eighteen (18).
As Morgan E&P continues to acquire additional net acreage and working interests, the number of net drilling locations is expected to grow accordingly.
It’s important to note that while these estimates are promising, neither CG&A nor Morgan can guarantee the exact recoverable amounts from these properties.
However, based on geological data, the estimated ultimate recovery (“EUR”) from a single well is expected to be approximately 814K barrels of oil equivalent.
#3. Strong Insider Ownership Helps Display A Very Noticeable Sign Of Potential Confidence.
Overall, Equus Total Return, Inc. (NYSE: EQS) has several potential catalysts, like a low public float and huge news from their subsidiary.
Maybe that’s why Equus Total Return, Inc. (NYSE: EQS) insiders are holding onto so many shares according to Finviz.
Strong insider ownership can be an indication of a company’s health and long-term potential.
When insiders own a significant percentage of a company’s shares, they have a vested interest in the company’s success, which can align their interests with those of other shareholders.
High insider ownership typically signals that insiders believe in the company’s future prospects and have confidence in its management team.
Equus Total Return, Inc. (NYSE: EQS) has over 54% insider ownership, which is a strong indication of confidence in the company’s future prospects.
In November 2023, Equus Total Return, Inc. (NYSE: EQS) revealed its third-quarter net asset value, marking a significant milestone for the company.
The highlight of this announcement was the remarkable performance of its wholly-owned subsidiary, Morgan E&P, LLC, which has been actively expanding and enhancing its operations in the Bakken/Three Forks formation within the Williston Basin of North Dakota.
Strong Growth in Net Asset Value
Equus Total Return, Inc. reported net assets as of September 30, 2023, amounting to $47,128, a significant increase compared to previous quarters. The comparative data below offers a clear snapshot of EQS’s net asset value over the past year:
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The most significant takeaway from this report was the surge in net asset value per share, which rose to $3.49 as of September 30, 2023, from $2.96 as of June 30, 2023.
Morgan E&P’s Expansion and Drilling Initiative
Morgan E&P, a wholly-owned subsidiary of Equus Total Return, Inc., has been instrumental in driving the company’s growth. On May 22, 2023, Morgan completed the acquisition of 4,747.52 net acres in the Bakken/Three Forks formation.
This strategic move was followed by another acquisition of an additional 1,150 net acres during the third quarter of 2023.
Moreover, the value of Morgan’s reserves experienced significant growth in the same quarter, signaling the promising potential of its assets in the Bakken region. The number of net drilling locations also increased, indicating a robust drilling program. Most notably, Morgan E&P initiated the drilling of two wells during this period.
As of September 30, 2023, Equus Total Return, Inc. valued Morgan’s equity at approximately $15.0 million. This valuation is primarily based on the company’s expectations of Morgan successfully completing its two ongoing wells and generating future operating cash flow.
It’s worth noting that the company enlisted the support of a reputable third-party valuation firm to ensure the accuracy and validity of the fair value determination for its investment in Morgan E&P, LLC.
Equus Total Return, Inc. (NYSE: EQS)’s third-quarter net asset value report showcases a remarkable increase in its net asset value per share.
This growth is largely attributed to the outstanding performance of its wholly-owned subsidiary, Morgan E&P, LLC, in the Bakken/Three Forks formation.
Morgan E&P’s expansion efforts, coupled with the initiation of drilling activities, underscore the company’s commitment to maximizing the potential of its energy-related investments.
NEWS
PUBLISHED
FEB 14, 2024
Equus Subsidiary Morgan E&P Provides Update on Reserves
PUBLISHED
FEB 13, 2024
Equus Subsidiary Morgan E&P Completes Two Horizontal Wells
PUBLISHED
DEC 18, 2023
Equus Subsidiary, Morgan E&P, Increases Net Acreage and Reserves in the Bakken
PUBLISHED
NOV 14, 2023
EQUUS ANNOUNCES THIRD QUARTER NET ASSET VALUE
MANAGEMENT TEAM
Robert L. Knauss
Chairman of the Board
Chairman of the Board of Philip Services Corp. (industrial services) from 1998 to 2003, and Chairman of the Board and CEO of Baltic International USA, Inc. from 1995 to 2003. During the past twenty years, Mr. Knauss has served on the Boards of Directors of eight public companies. Mr. Knauss was the former Dean and Distinguished University Professor of University of Houston Law School and was also Dean of Vanderbilt Law School.
John A. Hardy
Chief Executive Officer
Chief Executive Officer of the Fund since June 2011; Executive Chairman of the Fund from June 2010 to June 2011; Director of the Fund since May 2010. Mr. Hardy has had extensive experience in the insurance, finance and banking sectors, as well as mergers and acquisitions and litigation and resolution of multi-jurisdictional disputes practicing as a Barrister from 1978-2002. Mr. Hardy was also an adjunct Professor lecturing in insurance law at the University of British Columbia from 1984-2000.
L’Sheryl D. Hudson
Sr. Vice President, CFO and Treasurer
Ms. Hudson has been Vice President, Chief Financial Officer of Equus Total Return, Inc. since November 14, 2006. She served as Associate Director of WestLB Asset Management (US), LLC (“WestAM”) from 2002 to 2006. She served as Director of Portfolio Management and Valuation at Enron Corporation from 1998 to 2001.
Kenneth I. Denos
Chief Compliance Officer and Secretary
Mr. Denos has been Secretary of the Company since 2010 and Chief Compliance Officer of Equus Total Return, Inc. since July 2011. He has practiced securities law since 1996 and oversees regulatory filings for a variety of U.S. and international public companies. He specializes in securities, mergers and acquisitions, corporate finance, and regulatory compliance. For the past 15 years, Mr. Denos has served as a director or principal for several small-cap public companies on the London AIM, Frankfurt Stock Exchange, New York Stock Exchange, and the OTC Bulletin Board, and has worked closely with many public and private emerging growth companies throughout the world. In addition to a Bachelor of Science degree in Business Finance and Political Science, he holds a Master of Business Administration and a Juris Doctor from the University of Utah.
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