This should throw a car amongst the pigeons for those thinking a cap raise is coming - talking of facility being increased to US$150m and drawing down $60-$80m as early as this qtr!!
"Red Fork Energy Ltd (RFE $0.68) Buy Analyst: Jon Bishop
· The Mar Q witnessed a significant improvement in operational performance with 10 new operated wells completed (for 20 as at Mar 31) for production and the Company participating in a total of 17 new (op and non-op) wells (at various stages of completion) over the 3 month period.
· The weight of activity through late Feb and Mar should bear fruit in terms of the av. (month on month) production growth achieved in April when the ops update is issued later this month.
· With current cash and undrawn facilities totalling US$32m combined projected cash flow growth and increasing debt availability under the current RBL facility (@3.25% interest), we remain comfortable with RFE’s funding position.
· Noting that activity is now spread through 7 development areas and given that RFE is participating in nearly 40 wells, we expect that the independent reserve engineer (Keeling) will de-risk a lot of RFE’s 3P and 1C reserves and resources
· This will improve availability (as soon as this month) from US$20m currently to circa US$40m, thus improving RFE’s long term capacity to fund its accelerating (via improved spud-to-first sales cycle times) development pace
· We also understand that a parallel process will likely result in RFE upscaling the facility size (+US$150m) and availability (+US$60-80m) as early as this Q.
Price Target $1.84/sh"
RFE Price at posting:
66.0¢ Sentiment: Buy Disclosure: Held
