pan orient energy corp.- l44-w oil discovery: , page-82

Bell Potter

Carnarvon Limited (CVN.AX - A$0.64) Buy Target A$0.69



Quarterly demonstrates strong cash generation

A new discovery in Thailand shows the potential for additional oil fields and production upside. CVN has announced that the L44-W well has made a new oil discovery, which is currently flowing 1,220bopd. This is an exciting new discovery, not only for its potential size, but as the northernmost oil well drilled to date.

We are raising out valuation to $0.69 a share (from $0.49 previously) and maintain our Buy recommendation.

More good oil in Thailand—CVN extends oil fairway 10km to the north




The value of the discovery will depend on the size, with the following table showing possible valuation impacts for CVN’s 40% stake in the field:





We have assumed an oil field of 30mmbbl in our new modelling, which has increased our valuation from $0.49 to $0.69.



Key positives are:

This discovery is likely to reinforce the focus on a high quality asset onshore Thailand due to its low cost structure and low exploration risk.
The company’s management is prudently managing cash, with over $50m cash on the balance sheet and surplus cash flow from production.
Production target will in all likelihood be ramped up to 20,000 from 15,000bopd gross (to 8,000bopd net for CVN’s 40%).


Buy recommendation retained with $0.69 price target.


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