James Hodgins Leucrotta Exploration Inc. LXE-X PAST TOP PICK Dec 30, 2019

(A Top Pick June 23, 2017. Up 3%). This is the biggest position in his small-cap fund. He likes it from the fundamental change perspective and as a possible takeover..

This is a junior producer in the Montney. They have 140 sections in northeast BC. Current production base is 3500 barrels per day and they just had a discovery in a different area, which can increase their production to 4000. The cost of each well is very low so there is fast payback, typically 18 months to pay for a well. He thinks the new discovery is drawing attention from bigger players, such as Tourmaline, that might buy the new play or the whole company. The CEO owns a big chunk of stock and has been in this type of situation, and sold his company, before. He thinks a takeout will be above $3 and that it should get close to $3 even if there is no takeout. (Analysts’ price target is $2.73)

They're in northeast BC where Tourmaline is consolidating land and assets, near LXE. So, LXE will become topical. LXE has reached an inflection point after acquiring a lot of land and pushed the Montney play to the northeast. Now, they need a lot of capital to move to full development. They're talking to potential buyers, like Tourmaline who have bought land from LXE before. A spin-out of lands further north may happen. Take some profits.