Ann: Warro-6 Drilling Update, page-5

Transerv Energy (ASX: TSV) could be worth ten times its current market capitalisation as the result of the drilling program now underway at its giant Warro onshore gas field in WA, a new research report has found.
The report by highly experienced analyst Peter Strachan of Strachan Corporate says Transerv’s share of Warro, Australia’s biggest undeveloped onshore gas field, and the nearby Dandaragan Deep gas prospect, could be worth $464 million.
This is equal to 55c a share – or ten times Transerv’s current share price of 5.5c.
Warro, located in the Perth Basin in WA’s Mid West, is a huge field with an estimated 8-10 trillion cubic feet of gas in place.
Alcoa of Australia is funding the current drilling program under its farm-in agreement with Transerv. These two wells, Warro 5 and Warro 6, are aimed at unlocking the potentially immense value of the field by establishing the ability to flow the gas at commercial rates while avoiding the issues associated with water in the Warro-3 and 4 wells.
As well as having a substantial onshore gas resource, Warro has the key advantage of being located just 30km from the two key pipelines which carry gas into WA’s lucrative south-west gas market – the Dampier-to-Bunbury and Parmelia pipelines.
The recently-completed Warro-5 well was highly successful, extending the deepest known gas found in the field by 60m. Warro-6 is now underway and is expected to reach its target depth within a week or so.
Strachan’s report says that in light of the Warro-5 results, recalculation of the upside gas potential at Warro is likely to increase the gas resource target towards 3 trillion cubic feet of recoverable gas.
The report also cites the potential value of Transerv’s share in the nearby Dandaragan Deep gas prospect, which is estimated to hold 1.6 trillion cubic feet of recoverable gas.
“Strachan Corporate estimates that successful development of estimated C1 Resources at Warro would have a value of $148 million to Transerv, while full field development and exploration success at Dandaragan Deep holds upside potential estimated at $464 million,” the report says.
This valuation compares with Transerv’s current market capitalisation of ~$45 million, representing a potential increase of more than ten times.