euroz update

"Redfork Energy Ltd ($0.67) Buy 
 
Price Target: $1.50/sh
Analyst: Jon Bishop 
Date: 07 November 2012

Event

Mississippian Operations Update

Key Points        

·    Ramp-up in activity has resulted in the Bunch 1-19H and McMurtry 1-22H completed to sales; with the State 1-16H well due to commence testing in 7 days.

·    Stimulation of the State 1-13H well is due to commence this week; the Warburton 1-23H well will be completed late Nov; and the Mawson 1-3H slated for early Dec.

·    Three new wells are in various stages of drilling; current progress reports indicate that the recent improvements in spud to rig release times are set to continue.

·    Tasman #1-15H has averaged 180boepd for nearly 30 days (after approximately 45days since first production).  The peak 24hr rate recorded to date was 250boe.

·    Average rates are ahead of the Lee-Keeling and Assoc. ‘type curve’ used to compile the Company’s maiden reserves.

·    Alterations to reservoir management through completions’ design appears to date to have successfully reduce initial rates of decline.

Investment Thesis

RFE is showing steady inc. to development pace and efficiency at its  Big River Mississippi Lime asset.  RFE is in a strong financial and functional position to ramp-up development and leverage their acreage position. The maiden reserves validate our view that there remains significant upside to valuation once factoring-in full field development. We retain our Buy with a valuation and price target of $1.50/sh that reflects development drilling purely to hold acres by production."