Valuation and target price – increasing both (again)
Should the test of Teal EFS #1H prove successful, Texon's WI in the EFS in Leighton-
Mosman-Rockingham-Sutton has potential for 30-34mmboe of resource. At US$5.00/bbl, and risked to 75% this equates to approximately A$0.70/TXN share. For the Olmos reservoir, there are 24 further Proven and Probable undeveloped locations to be drilled with certified 2P reserves attributable to Texon’s WI totalling 2.9mmboe at Leighton. Our valuation from production is A$0.32/TXN share. The Olmos reservoir in Mosman-Rockingham, other leased targets and the Seitel agreement offers further upside potential.
Valuation and risks
Our risked valuation of TXN shares has risen to A$1.16/share (from A$1.05/share) with the successful production test of the first horizontal EFS well. There is material upside to this valuation should the second EFS well prove to be liquids-rich, and should exploration success in the Olmos reservoir match Texon’s recent experience. Success in the high-upside gas plays such as Maroubra would also be expected to have a positive effect on share price. Texon is adequately funded for its next phase of drilling. The risks relate to exploration success, prospect size, and the oil and gas prices in the US, as well as the AUD/USD exchange rate.
the teal ranch efs 1h should be fracced in march 2011.. approx 30+ days
something well and truly not being discussed but mentioned in the quarterly:
Should the fracture stimulation of the Teal EFS #1H prove successful this combined with the successful Tyler Ranch EFS#1H should result in some 15 proved and probable well locations. The reserves attributable to these locations will be assessed by independent reserve engineers in the coming weeks.