WOW any body seen this very good valuation by hartleys yet????
http://www.carnarvon.com.au/docs/Hartleys190907.pdf
Date
19 September 2007
ASX Code CVN
Share Price 21cps
Valuation 32-71cps
Market Cap (fully diluted)
$138.1m ($142.9m)
Issued Capital (fully diluted)
657.5m shares (680.54m)
Cash (as at 30 June 2007)
$8.9m
Management
Peter Leonhardt (Chairman)
Ted Jacobson (Managing Director)
Top Two Shareholders
ANZ Nominees Limited (6.0%)
Hamilton Capital Partners Ltd (2.3%)
Resources Analyst
Michael Robinson
Ph: +61 8 9268 2826
michael_robinson@hartleys.com.au
Resources Analyst
Andrew Muir
Ph: +61 8 9268 3045
andrew_muir@hartleys.com.au
Carnarvon Petroleum Limited (“CVN”, “Carnarvon”, “Company”) has
continued to experience a high success rate in the development of the Na
Sanun East field in Thailand (CVN 40%) through its JV with Pan Orient
Energy (operator). The JV is enjoying a better than 50% commercial
success rate, which is significantly higher than initial expectations of a
33%. This moves the Company to the verge of self-funding status,
expected to be achieved in Q4 CY2007. The Na Sanun East field has
emerged as the JV’s most significant producer and is set to underpin the
Company’s success in coming years.
A recent site-visit highlighted that the JV’s Phetchabun Basin fields are
well located, being very close to transport and other infrastructure. The
operator is developing the field in an efficient manner to boost production
and minimise costs.
We reaffirm our view that CVN is significantly undervalued based on our
32-71cps valuation range, and believe that the Company will be re-rated
as it achieves self-funding status and expands its development, appraisal
and exploration activities. We rate Carnarvon Petroleum Limited as a
Speculative Buy.
Investment Highlights
• Na Sanun and Na Sanun East Success Continues – Carnarvon
has improved overall production from some 50bopd in 2006 to
current levels of ~1,400bopd from four fields in the Phetchabun
Basin, largely through successful drilling in the Na Sanun East field.
• Currently Testing Potential for Additional 1,000bopd –
Carnarvon is in the process of flow testing three wells in the Na
Sanun East field that are expected to deliver an additional
1,000bopd, essentially taking the Company to the point at which
ongoing drilling becomes self-funding.
• Ongoing Success Can Deliver Re-rating – CVN is on the cusp of
becoming a self funding producer. This will enable the Company to
expand its exploration and appraisal efforts from its own cashflow.
This is an important step in the development of the Company and we
believe that, in this context, CVN will be re-rated.
• Site Visit Confirms Strength of Operations – A recent site visit has
highlighted that the operator has developed optimized production and
haulage systems which will ensure that maximum value is attained
from the field.
• Bo Rang and Si Thep Exploration Upside – The JV has developed
significant drilling targets in the Bo Rang and Si Thep fields. These
fields have many similarities with the Na Sanun field, making them an
important part of the Company’s exploration upside.
• Valuation Updated To 32 – 71cps – We have updated our valuation
range for CVN based on a scenario analysis assuming similar
success as seen at Na Sanun East. No change has been made to
our valuation of Wichian Buri as the Company’s focus has switched
to Na Sanun. Further exploration success in other fields such as Bo
Rang and Si Thep would deliver additional upside to our valuation.
Carnarvon Petroleum Limited Speculative Buy
Na Sanun Delivers
Share Price Performance
CARNARVON PETROLEUM LIMITED (CVN)