Derrilyn #3 release seemed a bit hyped to me. Looks like mgmt struggling for attention. Good progress and so flatlines.
IMO a couple of months or more of patience may be required, until STU get some of the new wells into production, and hopefully "record production", "record reserves", "record EBITDAX" all speak for themselves.
Based on the HY result and STU accounting policy I am not however expecting "record NPAT" this year. Who cares, they are growing the company.
Even though the exploration program is cost effective the exploration right off was high. Although delivering perhaps 1.5 mmbo, for an expenditure of $12.9 mm is OK, a huge $10.0 mm write off against profit for the 6 mths makes for a rotten bottom line, of only $2.7 mm.
IMO the sign of a fast growing company, the X writeoff is consistent with a company twice STU's size (or consistent with STU's stated objective of 200% reserves replacement).
Regardless, I am inferring the market is dissapointed and will only wake up to the story as the growing EBITDAX outpaces the DAX growth. Perhaps an analyst or tipsheet puts the wake up call out earlier, or perhaps we will have to wait until the Sept Q, when the STU story (sans hedges) will even be apparent to blind Freddy.
Alternatively perhaps the market is right and I am wrong.
Entropylord
STU Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
