Good analysis of the Waitsia discovery, and the two potentially large Kinga/High Cliff targets within EP426 (Lockyer Deep and North Erregulla Deep). Note that two historic wells (North Erregulla-1 and Lockyer-1) encountered secondary oil targets at the Dongara Sandstone level, thus derisking exploration yet as Hartleys note "providing material upside in the event of joint success". Note also the potentials identified in EP432 to the South.
Hartleys - who have been "long and wrong" for a long, long time on EGO - have continued to maintain their speculative buy rating, and have a 12 month target of $0.27. I personally don't know how the hell they can put a number on their target, which appears to be a "calculated" target based off a risked EV (and which they fail to provide their Risking metric when calculating the resultant share price). I tried to calculate a mid-case estimate (based off Lockyer alone) and came up with a completely different number, even using 50% probability. Perhaps someone else can share their calculations on this one.
Perhaps the most important paragraph in their report is the one on Page 18, which reads: "As outlined earlier we rate EGO’s exploration potential relatively highly for the KHC Play. We continue to view the Cattamarra Coals as high risk and replacing existing reserves at Red Gully ‘directly’ with near field targets while a high margin proposition, it remains in our opinion a lower probability.". This seems to indicate that they hold the view that RGN1 is dead in the water, which aligns to the opinion of many on this forum. Why the heck Angus doesn't simply come out and say this (and then focus attention on the real play, the KHC targets) is a mystery. Time to Man-Up a bit Angus (the market will applaud the company for fessinig-up and moving on I reckon).
As Hartleys note, "Funding for exploration however will require a farm out and while this potentially could be a significant positive catalyst for the stock price, it also presents a risk if current plans for a farm out of its Kingia/High Cliff prospects cannot be achieved.". In other words, its a heads-or-tails scenario for the company now: you either go forward (with a farmout) or you are dead in the water.
Can't be simpler than that.
I personally don't think the company will survive until the AGM if they don't announce financing arrangements / farmin arrangements before the end of Q3. Some scrap merchant will line the company up well before then and sell off its remains to the nearest pawn broker. Anyone who paid more than 20 cents won't get their money back imo.
