I first owned shares in about 2004 when they were a minnow trading around 4 to 6c. A lot has been added to the value since then.
1. Increased acreage
2. On 4 September 2009, Icon Energy Limited was placed on Standard & Poor?s (S&P) ASX Top 300 listing based on its aggregate market capitalisation and liquidity of the stock for the preceding six months of 2009.
3. Icon Energy and Beach Energy signed Heads of Agreement in October 2009 for an $8.5m deal for up to half of Icon Energy?s 80% interest in ATP 855P.
4. In August 2009 Wakefield-1 in PEL 218 encountered oil and gas shows at multiple levels. The results from this well have indicated that the area could be a potential new coal seam gas find in South Australia?s Cooper-Eromanga Basin.
5. October 2009 saw Icon Energy successfully complete Australia?s First Carbon Neutral Seismic Program. This is a major advancement in environmental responsibility for the Coal Seam Gas (CSG) industry. Over 300km of 2D seismic data was recorded in the south-eastern Queensland portion of the Surat Basin. The Terrex seismic results was compiled with existing data on the land to strategically plot the 2009 ? 2010 Drilling Program for ATP 626P.
6. In August 2009, Icon Energy?s Gas Initially in Place (GIIP) for ATP 626P was 5,440 PJs. This was subsequently upgraded to 6,115 PJs in September 2009. The Lydia Block was estimated at 775 PJs (3C) of the 6,115 PJs by Netherland Sewell & Associates Inc.(NSAI).
7. In December 2008, Icon Energy and Stanwell Corporation signed a Gas Sale Agreement and Joint Operating Agreement. Icon Energy received a $6 million payment from Stanwell Corporation Limited under its Stage 1 Development Program for the Lydia Block in ATP 626P. This provides a strong platform for commercialisation of the coal seam gas resources in this tenement. Under its agreement with Stanwell Corporation a further $30 million will be injected into Icon Energy if a minimum proven and probable (2P) reserve of 340 PJ is achieved.
8. Icon Energy has a diverse portfolio of quality tenements with Coal Seam Gas, Petroleum and Geothermal energy acreage totalling more than 18,250 Km2. Icon?s main acreage assets lie in the Surat and Cooper Basins in Queensland and South Australia. To date, around 13% of this land has been explored.
9. Oil prices have increased from US$40 to around US$80 and with the recovery from the GFC, expectations are for the oil price to continue to increase towards the US$150 a barrel level.
10. NYMEX Henry-hub Natural Gas prices have been increasing from the middle of 2009.
11. The ICN board is experienced and professionally well regarded and have good knowledge of legal, technical and corporate governance issues and JV's and Farm in contracts.
12. With less than 450m shares on issue and a market cap of only $160m , there is significant upside.
13. The spike to 65c on the 8th of April was as a result of few shares being listed for sale at the open and day traders looking to ride the MOU announcement. The following drop to 36c reflected the exit of many of the day traders. The current total market depth suggests many of them are still holding at higher prices. The month high data shows ICN month high's consistently above 47c for the period Aug 09 through to Dec 09. I'd expect the current excess of sellers to decline over the next week and the share price return to higher levels to reflect the value in the assets and agreements. The next announcement on the China Gas MOU deal ( value up to $A32 Billion) and subsequent announcements could be expected to correct the current oversold share price and move back above the previous high of 64c in Sept 09 and 65c on the 8th April 10.
14. As the market gains further knowledge about the deal with China, the certainty will be reflected in the increase in the Market Cap of ICN. My price target is in the range $1 to $1.50 on confirmation of the MOU details and significantly higher when further confirmation of revenue timing occurs. $32 billion is such a large deal that the market is currently scratching it's head wondering how it could be so big. When it works it out, watch and see the re rating. The current situation reminds me of the one Continental Coal (CCC) was in 6 months ago. That's about to change as well.
15. At the time of writing, ICN's total market depth is 3.8m on the buy side with 12.1m on the sell side with a pre open of 36c. As it moves back to equal buy/ sell depth, the price could be expected to be around the 60c levels and as the buy side becomes higher than the sell side, the serious moves will begin.
ICN Price at posting:
36.0¢ Sentiment: Buy Disclosure: Held
(20min delay)