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Arabella Exploration (AXPLF)  has been the shining star of my "Mad Money" portfolio. The warrants (AXLWF) that I own for that model portfolio and for my clients have more than doubled since the portfolio's inception in mid-January and more than that for most of my holders as I was buying the warrants aggressively around Christmas, ahead of Arabella's transition from a Special-purpose acquisition company (SPAC) to a public company.

Emerging companies, especially in energy, tend to grow in stages. This summer Arabella transitioned from the "idea" stage to the "execution" stage as the company's Emily Bell #1H well showed a high initial production rate (more than 1,100 barrels of oil equivalent per day), and, even more importantly, a solid 30-day production average rate of 482 boepd.

But with 10 wells (nine new-drills and one re-entry) remaining to be drilled under the company's current business plan, the question was always, how will the company finance the drilling? I've been asking that question of CEO Jason Hoisager and Director Bill Heyn for nearly a year. During our private meeting at EnerCom in Denver two weeks ago, their answer was, "We need to go to the airport." When a management team rushes out of a meeting, you know something is up. I was hoping it was something big, and they nailed it.

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Today Arabella announced a $45 million secured note facility. The details: $16 million up front, $5 million in the next 60 days and the rest is available as drilling performance hurdles are reached through Sept. 2, 2015. It's not cheap money -- nor would one expect it to be for such an early stage driller -- but the notes bear a 15% coupon (warrants were attached, as well) and mature one year from sale.

So, the drilling plan is financed and Arabella can go on exploiting its Southern Delaware acreage in Texas' Reeves and Ward counties. Arabella's much larger neighbor Concho Resources (CXO) - Get Report  has been absolutely killing it in its Southern Delaware basin acreage, which has offered validation for Arabella's drilling plan. CXO is running six rigs in the Southern Delaware and recent well results have been stellar. CXO's eight most recent Southern Delaware wells have averaged a 30-day initial production rate of 1,093 boepd with an 85% concentration of oil. Concho is focusing on the same two formations -- the Wolfcamp and Bone Spring, or, collectively, the "Wolfbone" -- as Arabella. It's an abundant play, and the oiliness of the production is going to drive extremely high internal rates of return for Concho, and, by association, Arabella.

In my March 14 column, I derived a fair value for Arabella of $14 per share. That was predicated on Arabella's goal of having net production of 2,000 boepd by year's end -- a target that has been pushed into early 2015 due to the later-than-expected closing of the financing. But the financing is also much larger than I had expected, and that will carry Arabella through the next 12 months of drilling by my calculations.

So, if you want to knock off a dollar from my price target on Arabella due to timing issues, that's fine. A move to $13 would still represent 79% upside from the current price. "Current" is italicized because the quote that you see for AXPLF actually represents Tuesday's closing price. Yes, on the day that the company announced the biggest single piece of news since the consummation of the merger, not a single share of Arabella has changed hands.

That's the final hurdle, getting some liquidity in the stock. Heyn has been working diligently with the SEC to get Arabella registered as a bona fide U.S. company, and I believe that will happen soon. That doesn't imply a flood of liquidity on day one, but investors' desire for 4P (Pure-Play, Public Permian) companies is such that I believe liquidity will be created. Warrants will be converted to common, although based on my price target, you can probably guess that I won't be cashing my or my clients' in any time soon, and AXPLF's ridiculously small float of 750,000 shares will be increased.

Also, Arabella can call the warrants if the common trades above $10.50 for 20 of 30 trading days, and it is certainly no coincidence that it was at that price that Hoisager invested $2 million of his own money in AXPLF on June 27. He told me in Denver that he believes AXPLF is worth 50% more than that price, and I hope he's proven right.

(Please note that due to factors including low market capitalization and/or insufficient public float, we consider AXPLF to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)

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At the time of publication, Collins was long AXPLF warrants, although positions may change at any time.