HOG in gravyIN July 2010, Hartleys oil analyst Dave Wall...

HOG in gravy

IN July 2010, Hartleys oil analyst Dave Wall recommended Aurora Oil & Gas (AUT) at a valuation of $1.64 a share. It became the best-performing stock that year and is now sitting at $4. So we feel duty bound to report that Wall has put out a note on Hawkley Oil & Gas (HOG) with the headline: "Is this the best-value stock on the ASX?"

HOG's first Ukraine well has been flowing gas and condensate for about 15 months with annualised revenues of about $US25m ($24m). The next well should be in production later this year, doubling the cashflow. The Sorochynska project has proven and probable reserves of 40 billion cubic feet of gas and 1 million barrels of condensate. Present daily production is 6 million cubic feet and 200 barrels, respectively.

Work is also progressing at the Chernetska project, where historic wells have flowed gas and one estimate sets resource potential at 300 billion cubic feet. Ukraine gas prices are five times those of the US.

Wall says HOG is one of the few oil and gas companies to take a small amount of invested capital and turn it into positive cashflow. It is "undervalued on every metric, both fundamentally and comparatively". His target is 60c a share against Friday's close of 24.5c.