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Ann: Investor Presentation, page-58

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neeco68

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11/07/19

17:53

Post #: 39481646
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Originally posted by Cosmoterios: ↑

Carnarvon Petroleum Limited (ASX:CVN) has received a vote of confidence from Euroz’s Head of Research, Jon Bishop.

On Monday this week, Carnarvon provided a drilling update for the offshore Roc South-1 exploration well noting commercial hydrocarbons had not been found in the Caley and Baxter intervals.

The well will be deepened to test the lower Crespin and Milne sands with results expected next week.Bishop believes the recent pullback in the price creates an investment opportunity for a number of reasons.Dorado discovery worth 51 cents on its own

Foremostly, Bishop estimates the Dorado discovery to be worth $684 million or 51 cents per share alone.

The 51 cents per share net Dorado valuation is based on risked in-ground valuation of 34 million barrels of 2C recoverable net oil sense-checked by a fully diluted and debt funded DCF of a phase 1 development.

Bishop also estimates Baxter adds another 9 cents per share valuation and Phoenix-Roc adds another 7 cents per share valuation.

Euroz estimated asset valuation.Investment case: pullback creates buying opportunityBishop concluded: “Per AWE and its Waitsia discovery, appraisal success ultimately drove corporate overtures and ultimately acquisition (by Mitsui).

We see CVN undergoing a similar genesis noting appraisal results can be expected later this H. “On top of which, possible farm-down of Buffalo and Labyrinth represent significant catalysts in their own right noting that the current EV is largely attributable to the Contingent Resources booked at Dorado.

“We remain convicted on the intrinsic value of the Dorado discovery but moreover the value implications for the broader Bedout Basin portfolio as a consequence. Market metrics, transaction analysis and preliminary DCF valuation of a potential development of at least Dorado reinforces our estimates of CVN’s asset valuation.

“Dorado and the broader Triassic play fairway is one of the best discoveries ever made in Australia and CVN owns 20- 30% with a commercially motivated JV partner. The Roc South result has not changed the investment thesis in any material capacity. “Hence the market reaction today presents an opportunity: Buy.”

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Euroz note that this valuation is largely based on Contingent Resources booked at Dorado.

If more resource is confirmed/discovered, as seems likely with Dorado (volumetrics currently pending) and with Buffalo (per quarterly announcement) then there is more upside than $0.84.

Interesting times ahead for sure.

CVN Price at posting: 47.0¢ Sentiment: Hold Disclosure: Held
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Ann: Investor Presentation, page-58

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