oriels recommendation, page-29

re: oriels recommendation - what i like capman

Love those 2 comments ... but there's so many more!!!! Like the fact that Oriel's valuation model does not include anything for Banda or Pelican gas - which would double HDR's reserves. They took a core recently at Banda and I expect appraisal this year .. wouldn't a gas development get things going!!! And with POO at US$46 average their current valuation gets to 100p = $2.50 (and that's the minimum price we have had in the last 6 months+). Also, they say that HDR has to hedge part of their production as a condition of the ANZ oan facility .. and if they hedge at the current price (which you would expect) that adds again to the valuation. And their model is for Ching at 130mbbl .. and they say its possible it will be upgraded to as high as 180mbbl (that would add 12% to valuation by my rough calculation using their figures).

Just with the likley additions to valuations (oil price, hedging and Chinguetti upgrade) and giving this year's likley targets a fully risked valuation of 28p = 68 cents (the unrisked valuation is 156p = $4.00) I'm getting something like $3.40. So, if we get a 25% strike rate on exploration (which is conservative given its 45% so far) that adds $1.00, and a gas development (which is possible given BG's involvement - after further gas appraisals this year and early next) will add another $0.60 minimum (this is very conservative as a gas development would double current reserves valued at 53p @ US$38/barrel = $1.30). hey .. I'm getting Sailorgirl's $5.00 as a minimum!!!!!! Awesome!

Its good to dream...................

H