Couldn't agree more Clark888. The only way we will see a long...

Couldn't agree more Clark888. The only way we will see a long term increase in SP is for a material improvement in Sales revenue. Hopefully this quarter and half year won't be headlined by another one off (positive or negative) that blurs the underlying profitabilty of current operations.

I have pasted the current CommSec valuation for all to read. I don't think BPT have ever risen to the valuations some have placed on them (even in a bull market) but worth a read anyhow.

Beach Petroleum: Now even better value!
Last Traded: $1.29 Market Cap: $1.149b Sector: Energy
BUY / OUT PERFORM Valuation: $1.26 (I think someone made a typo)

Analysis
CommSec initiated research on Beach Petroleum (BPT) in September 2007 when the BPT share price was $1.44, with a BUY / OUT PERFORM recommendation. The current share price is $1.25, despite higher oil prices and improved operations.

CommSec’s base case valuation $1.98; downside $1.45
CommSec’s base case valuation is $1.98, while our downside valuation is $1.45, which is still 15% above the current share price. CommSec’s downside case:
Uses $55/bbl as the L-R oil price
Uses a discount rate of 13% real, compared with a WACC of 13.5% nominal;
Has NO value for certain potential.

Outlook
Operationally
Events since September 2007 include :
Production and sales have been slightly ahead of expectations.
The Basker 6 development well intersected the expected sands, but low to prognosis in March, leading to a side-track that has performed more in line with expectations.
BPT’s Cooper Oil Project has continued to perform in line with expectations, even though Santos’s project has been scaled back.
Oil pries have been much stronger than expected, but oil equities have fallen.

While the share price has been moved by recent events with the drilling of the Basker 6 well, CommSec’s downside case assumes the P90 Reserves which does not include Basker 6. CommSec’s base case is based on P50 reserves, but is risk weighted to only 24c of the $1.98 total as it is assumed to be produced subsequent to the P90 reserves rather than raise the production rate due to the limitations of the FPSO.

Valuation and recommendation
CommSec retains its BUY / OUT PERFORM recommendation.

Cheers