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Antares Energy Ltd. Message Board

  • dkjtuyrkerj dkjtuyrkerj Sep 13, 2011 3:47 PM Flag

    New Research

    No need to change the forward estimates
    We have made modest increases to the 2H 2011 as a result of the 1H result, and the
    fact that another 11 wells have recently started, or are about to contribute to earnings.
    AZZ provided little commentary with today’s result, but last week’s presentation to the
    Good Oil conference in Fremantle contained some new details on the key production
    wells, which should give investors increased confidence in the expected production
    profiles. We have revised our DD&A charges in the longer term estimates but our
    risked Price Target is unchanged at $1.04/share, and unrisked at $1.54.
    Investment View
    AZZ represents a very attractive investment opportunity in our view, and we
    recommend a Spec Buy with 155% upside to our Price Target of $1.04. The Permian
    basin of West Texas is one of the oldest and most productive oil regions in the US,
    and has enjoyed a new lease of life in recent years as the technology to extract
    hydrocarbons from shales has revolutionised the industry. The Permian is a hive of
    activity, with about 300 drilling rigs active in the area, and M&A transactions pointing
    to further upside. BHP’s purchase of Petrohawk for $15B is noteworthy as 325,000
    acres of that company’s land holdings are in the Permian basin. BHP paid
    $15,100/acre for Petrohawk. It would be premature to use that benchmark for AZZ but
    if we value its 30,000 net acres at $5,000/acre we derive an EV of $150m
    ($0.57/share) and at $10,000/acre $300m or $1.14/share. The stock is undervalued.

    No need to change the forward estimates
    We have made modest increases to the 2H 2011 as a result of the 1H result, and the
    fact that another 11 wells have recently started, or are about to contribute to earnings.
    AZZ provided little commentary with today’s result, but last week’s presentation to the
    Good Oil conference in Fremantle contained some new details on the key production
    wells, which should give investors increased confidence in the expected production
    profiles. We have revised our DD&A charges in the longer term estimates but our
    risked Price Target is unchanged at $1.04/share, and unrisked at $1.54.
    Investment View
    AZZ represents a very attractive investment opportunity in our view, and we
    recommend a Spec Buy with 155% upside to our Price Target of $1.04. The Permian
    basin of West Texas is one of the oldest and most productive oil regions in the US,
    and has enjoyed a new lease of life in recent years as the technology to extract
    hydrocarbons from shales has revolutionised the industry. The Permian is a hive of
    activity, with about 300 drilling rigs active in the area, and M&A transactions pointing
    to further upside. BHP’s purchase of Petrohawk for $15B is noteworthy as 325,000
    acres of that company’s land holdings are in the Permian basin. BHP paid
    $15,100/acre for Petrohawk. It would be premature to use that benchmark for AZZ but
    if we value its 30,000 net acres at $5,000/acre we derive an EV of $150m
    ($0.57/share) and at $10,000/acre $300m or $1.14/share. The stock is undervalued.

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