in the Age, extract:Eromanga delivers on Brazilian oilFROM the...

in the Age, extract:


Eromanga delivers on Brazilian oil

FROM the update file comes news that Phil Galloway has been out and about updating investors on the Brazilian oil adventures of Eromanga Hydrocarbons (ASX: ERH), one the best-performed juniors in recent times, even if the oil price has come off.
It was back in November that Garimpeiro last had a look at the Melbourne-based Eromanga. It was then trading at 18¢, and held promise of coming up with some decent oil pools in its exploration in the onshore Sergipe Alagoas and Renconcavo basins.

That it has delivered is reflected in Friday's close of 36¢ a share. At that price, Eromanga's Brazilian oil business is being valued at $71 million (after deducting $11.2 million from market cap for cash at hand and after knocking out $49.2 million for in-the-money contributing shares and options).

The $71 million value roughly matches the after-tax value that can be ascribed to the group's share of just one of the oil finds (Block 330). Assume oil price at $US90 a barrel and there's $63 million value for the find now under extended production test.

There has been another discovery (Block 430) being flow tested and at least three more exploration wells — all on trend with producing oilfields — that are to be subjected to the drill bit by the end of the year.