Action We maintain our Speculative Buy recommendation based on...

Action

We maintain our Speculative Buy recommendation based on the potential for future exploration success, however, downgrade our Price Target to $0.014/sh (from $0.032/sh) as a result of the Booth-1 well failure and removal of value associated with the prospect, decrease in the value of the State Gas (ASX:GAS) substantial shareholding, and account for dilution from the recently completed share placement.

Given TEG’s relatively small current valuation, the company has large leverage to potential future drilling success, with the potential for the share price to re-rate if oil or gas are discovered at the planned remaining two wells in TEG’s operated Perth Basin acreage, with Becos-1 well targeted for drilling in the short-term.

Catalysts

• Becos-1 oil well environmental approval, rig contract, spud, results (~2HCY24)
• Second L7 permit well, i.e. Mount Horner 2 Updip prospect (~1HCY25)
• Cliff Head Oil Field divestment finalisation and sale proceeds (~2HCY24).
• New ventures activity (UK, Philippines)