Conrad - BUY $2.60 price target

Indonesia poised to benefit from Australia's "quietquitting"

The Australian Government has been accused of "quiet quitting" LNG by Japan's largestinvestor in Australia, Inpex, a statement which is difficult to argue with, in our view, inlight of recent policies that have targeted the industry, and seem to ignore the view,held by a number of experts, that gas is a key bridging fuel to a low carbon future.Energy demand growth in Asia is likely to continue but we believe an uncertaininvestment outlook in Australia will likely see capital increasingly allocated elsewhere.We believe Australia's loss could well be Indonesia's gain and CRD is exceptionally wellplacedto benefit.

Aceh assets to become increasingly sought after

CRD was recently awarded two Joint Study Areas (JSAs) located offshore northwestSumatra within the Aceh Province of Indonesia (100% CRD). The JSAs contain existinggas discoveries in shallow water with massive exploration upside in deeper water (basedon seismic data) which could capture attention from super majors. Indeed, we note thatCRD has already received dataroom requests, and we expect this interest to ramp up asexploration budgets and rigs are increasingly allocated away from Australia (see article).CRD expects a third party competent person report in the coming months which willinclude Contingent Resource and valuation estimates.

Singapore's gas demand is set to grow

Keppel's S$750mn, 600MW Sakra Cogen Plant will commence generating in 2026. Theplant will initially operate on gas and has capacity to take up to 30% hydrogen as supplysources become available. With increased electrification and 95% of its generation gasfired,demand growth is set to continue apace (5% CAGR over last 10 years) despite thecountry's increasing reliance on high-priced LNG. We believe CRD’s Mako gas discovery(CRD 76.5%) provides an opportunity to reverse this trend. At 413Bcf it can supply~10% of Singapore’s annual gas needs and can be brought into production quicklythanks to the simple nature of the development and its proximity to existing pipelineinfrastructure.The next major potential catalysts for Mako are: 1) conclusion of a gas sales contract;and 2) any sell-down by CRD.

Mako refresher

With a PSC-constrained gross resource of 437Bcf (CRD net entitlement 228Bcf), locatedonly 110km from an underutilised West Natuna Transportation System (WNTS) thatconnects directly to Singapore, Mako has a very short lead time to first production.The Indonesian government has already signed off on an enlarged 120mnscf/ddevelopment (PoD) that will allow up to 100% of the gas to be exported to Singapore.Based on the current development schedule first gas from Mako could be available toSingapore in CY25.CRD's current upfront capex estimate for Mako stands at ~US$300mn (CGe US$330mn)and we expect discussions with debt financiers to ramp up when a gas contract issigned. With low resource risk (six wells have been drilled into Mako), Singaporeanbuyers signing oil-indexed gas contracts north of 12% (U$10+/GJ at spot oil), thePoD approved and CRD having a large working interest we believe the company couldconduct a sell-down which: 1) substantially reduces funding risk; and 2) provides ahighly positive window to value.

We maintain our SPECULATIVE BUY rating and $2.60 price target.