Big potential — but with risk to match

Article Excerpt

MART RESOURCES $0.59 (Toronto symbol MMT; TSINetwork Rating: Speculative) (403-270-1841; www.martresources.com; Shares outstanding: 340.2 million; Market cap: $188.2 million; No dividends paid) trades at a low multiple to cash flow. That reflects investor concern about operating in politically unstable Nigeria. Right now, Mart is producing oil from its 50%-held Umusadege field in southern Nigeria’s Niger Delta region. This field is about 150 kilometres northeast of the major port city of Warri. The Niger Delta region accounts for over 90% of the company’s proven reserves. This area is the scene of many long-standing ethnic conflicts, including a failed breakaway attempt by the self-proclaimed Republic of Biafra between 1967 and 1970. The Nigerian army is still active in the Niger Delta, where it suppresses attacks on oilfields and pipelines, as well as hostage-taking by militant groups and criminal gangs. Even so, Mart’s oil production continues to rise: in the three months ended March 31, 2011, oil production rose 20.2%, to 3,699 barrels per day from…