RNE 12.5% 0.5¢ renu energy limited

broker note

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    From brokers note yesterday:

    Subject: Woodside Metasource exit GDY

    Key points:

    * It would appear that Woodside Metasource has exited GDY with a cross of
    circa 11.5m hitting the screens today.

    * Woodside's exit is not a huge surprise as it has not participated in any
    of the more recent capital raisings. The timing of the exit is a little
    more surprising given the current status and potential newsflow over the
    next 6 months.

    * It would appear that the buy side was a spread of financial institutions
    and high net worth's.

    * Reaction to the exit is likely to be mixed. The exit of Woodside is,
    obviously, not a positive endorsement for GDY. However, it has long been
    apparent that GDY was not a core investment and GDY's JV with Origin, with
    respect to the Cooper Basin operation, in hindsight may have perceivably
    made Woodsides position untenable in the long term.

    * On the positive side the pending entry of SunSuper and Sentient (in
    addition to Origin) as cornerstone investors is a positive endorsement,
    particularly given the extensive due diligence we believe both have
    undertaken over the past year. Also it may be argued that a spread of
    institutional investors is a positive.

    * One thing we do know is the number of enquiries we have been receiving
    from large international and domestic, financial and industry institutions
    has increased significantly in recent months. It would appear that since
    the completion of Habanero#3 global awareness of the Cooper Basin project,
    and GDY, has increased.

    * We expect increased volatility following this announcement but note that
    project fundamentals have not changed and retain a positive view. There are
    some significant milestones looming, which we believe will catalyse further
    interest. Also, the market re-rating of the East Australian energy market,
    as seen across the CSG sector, must, if real, be equally relevant to GDY
    and its Cooper basin project, assuming the project is commercially viable.

    * Our current recommendation and price target is Buy and A$2.06. We are
    reviewing our conservative valuation assumptions with respect to recent
    energy related events (CSG) and note that Eastern Australian energy price
    expectations and GDY's commercial viability would have to be positively
    correlated.
 
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