Canaccord on CRD - Data Room Open

Data room open, closing in on a foundation contract

CRD remains our preferred gas exposure within our small-cap coverage, benefiting from
clear government support, underutilised infrastructure, strong unencumbered market
pricing and a fully appraised cornerstone asset.
We retain our SPEC BUY rating and $2.60 price target.

While respective governments negotiate terms...
Negotiation of the key terms for the Mako gas sales agreement between a Singapore
buyer and the Indonesian regulator (SKK Migas) is expected to be finalised during the
June quarter.
In our view the continued GSA negotiations should allow the company to take
advantage of an improved and favourable pricing environment, given strong worldwide
gas demand and low supply. While we have retained our 12% slope to Brent for
valuation purposes (equates to ~US$8.5/GJ) we now see upside risks to this forecast.
The Mako gas field, as the largest undeveloped gas resource in the West Natuna, is
an important strategic gas asset for both countries and with the majority of the NPV
heading to Indonesian hands we do not foresee any roadblocks to GSA conclusion.

...FEED continues and no delays are anticipated

Front End Engineering Design (FEED) studies were initiated during Q4 CY22, with three
separate FEED studies currently being progressed for the Mobile Offshore Production
Unit processing facilities; the Subsea Umbilicals, Risers and Flowlines; and for the
Conductor Support Frame. A geophysical pipeline route survey has commenced and the
FEED studies and survey will be completed by Q2 CY23.
The process to acquire environmental approvals for development is ongoing. The
Government of Indonesia requires certain environmental permits for any company to
conduct any drilling or construction activities within the country. Baseline surveys are
planned to be acquired during early Q2 CY23 and the approval process is expected to
conclude during Q3 CY23.

A dataroom has opened and suitors may be interested in more than one
asset

CRD has opened a dataroom for the partial divestment of the company's interest in
Mako (currently 76.5%). It expects bids to be received during the June quarter and has
indicated that the industry response to date has been "encouraging".
Additionally, we note that CRD was recently awarded two Joint Study Areas (JSAs)
located offshore northwest Sumatra within the Aceh Province of Indonesia (100% CRD).
The JSAs contain existing gas discoveries in shallow water with massive exploration
upside in deeper water (based on seismic data) which could capture attention from
super majors. Indeed, we note that CRD has already received dataroom requests, and
we expect this interest to ramp up as exploration budgets and rigs are increasingly
allocated away from Australia (see article).

CRD expects a third party competent person report in the coming months which will
include Contingent Resource and valuation estimates.
Balance sheet and earnings changes

CRD ended the quarter with US$13.2mn in cash. We have lowered our earnings
forecasts on the back of higher exploration expense forecasts.