Great Analyst Report from Morgans!
- Research coverage on Omega Oil & Gas (OMA) with a Speculative Buy rating and A$0.64 target price.
- OMA’s flagship Canyon Gas Project has a ~1.7 TCFe resource located strategically close to the east coast gas market.
- Early frac results from Canyon-1H are encouraging, with flowback now underway.
- OMA is trading at a discounted A$0.07/GJe (vs undeveloped peers at A$0.21/GJe).
- Gas producers trade on A$0.77/GJe showing the ultimate ‘size of the prize’.
Valuation
- We value OMA using a risk-adjusted resource multiple approach. At A$0.07/GJe, OMA trades at a significant discount to undeveloped ASX-listed gas peers averaging A$0.21/GJe, and well below the A$0.77/GJe average for producing gas companies—highlighting the ultimate ‘size of the prize’. Our current OMA valuation implies an average resource multiple of A$0.12/GJe, which appears reasonable for its risk profile. Using this methodology we value OMA at A$0.64ps.
- Applying a peer average or producer average multiple to OMA’s large resource base would provide upside valuations ranging A$1.10-$4.00+ per share, showing the amount of upside value under different success scenarios, although worth noting these valuations aren’t possible without material de-risking of Canyon.
AUS_OMA_250317_The_final_piece_of_Queensland_s_energy_puzzle_.pdf
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