* Event: FY07 net losses of $4.1m (pre-abnormals): * Net losses (pre-abnormals) for FY2007 were A$4.1m. This compares to our forecast loss of $4.2m and a loss of $4.5m over FY2006. The FY07 result was impacted by one-off significant items, namely a change in the fair value of convertible notes and a share based payment expense. The result was also impacted by a net FX gain.
* Impact: EPS forecast changes: FY’08 -7%; FY’09 +84%: * We have reduced our FY2008 EPS by 7% as we expect higher operating costs are required for development and expansion of AED’s assets. We have also included production from Puffin SW commencing in 2H08 which has increased our FY2009 EPS outlook by 84%.
* Action: Upgrade rating to Buy: * We have upgraded our AED rating to Buy (prior Neutral). Puffin South West, with its 40mmbbl estimated recoverable resource, together with encouraging initial simulated flow rates and the signing of a charter agreement for an FPSO, suggest Puffin SW may be an asset similar in scale and value to AED’s Puffin Main field.
* Valuation: NAV A$10.29 (prior A$5.29) based on DCF at 10% * Our AED NAV is now $10.29 (prior $5.29), which incorporates Puffin SW as a stand alone development. Our share price target is now $11.48, reflecting our NAV, plus risk weighted exploration upside.
AED Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
