deusche bank recommends buy with $2.10 target

Deutsche Bank has initiated coverage of Drillsearch Energy with a “buy” recommendation and a 12-month price target of $2.10, describing the energy company as offering “pure-play exposure to the Cooper Basin”.

The broker says that high-margin conventional fields underpin high growth and cash flow, with the company guiding towards 215 per cent production growth for the 2013 financial year.

“With 3D seismic significantly derisking exploration prospects (75-80 per cent success rates) and 88 [million barrels of oil equivalent] of prospective resources, DLS has a material inventory of low-risk, conventional prospects to drive reserve growth in FY13 and beyond.”
Deutsche is forecasting earnings per share growth of 82.7 per cent to 11¢ for the year to June 2013, and 111.2 per cent to 22¢ for 2014.

The Australian Financial Review
10 September 2012