Sunshine Gas (SHG) announced a significant increase in reserves at the Lacerta coal seam gas project. Proved and Probable (2P) reserves more than doubled to 469PJ, while Proven, Probable and Possible (3P) reserves now exceed one thousand PJ.
This is a very positive development for the company and is a clear indication that the appraisal work at Lacerta is bearing fruit. We are also very much encouraged by the speed of the reserves verification work, with the initial reserves certified just over two months ago.
We upgrade our risked valuation to $1.22 from $0.92 a share at this time, assuming that the newly certified 2P reserves can be developed with the same economics we had modeled for the initial Lacerta development (a conservative assumption).
Given the current share price levels we maintain our short term HOLD rating on the stock.
Over the past year the management commenced establishing a very positive track record of delivering results and we therefore maintain our long term BUY recommendation.
Valuation Summary Liquid assets, corporate $0.10 Appraisal & Development Projects $0.93 Exploration Potential $0.19 Total Valuation $1.22
Significant Shareholders % Held
SAAD Investments Company Ltd 21.7% Anthony Gilby 4.8% Skerman Investments 4.2%
SHG Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
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