morgan stanley update on esg website

Target rasied to $1.10 with Base Case valuation on current reserves at $1.12 and Bull Case at $1.73. They reiterate their Buy and Overweight recommendation. Here's an extract on their Bull Case:

In our bull case we assume that confidence in the
upside reserve potential in the Gunnedah is achieved
opening up the vast gas potential of the basin. While
subjective we turn to multiples paid by E&P’s to gain a
foothold in emerging areas, and therefore apply the
A$1.65/GJ (related to the 2008 Petronas/Santos deal)
multiple to ESG’s 3P reserves in our bull case.

Our scenarios do not capture value for the material
resource upside to which ESG is exposed. This
includes a 3C contingent resource of 3983 PJ (net)
and a prospective resource in excess of 20Tcf
(gross).

Note 2 things: They are basing the Bull case on 3P reserves as that's the metric used by STO and other analysts so far. The upside on 2P is far higher IMHO... with $2.00 per GJ a likely base price giving us a target of over $2.00 once the 1,300 PJ of 2P are proved and up from there on further upgrades (likely this year) and on any takeover action.

So come on ESG start blowing your trumpet!

H