This is from 25/03/13 but thought some might be...

This is from 25/03/13 but thought some might be interested...

Bell Potter allowed $1.85 ps for Emu.Price Target now $6.45.

Emu exploration well disappoints
?? Emu-1 exploration well failed to find oil in the primary target reservoirs
The Emu-1 well in the Santos Basin, offshore Brazil, was targeting mean
prospective resources of 350 mmbbl. The main reservoirs were found to be water
bearing, although there was evidence of hydrocarbons in some thin sands. The
prospect was rated as having a 24% chance of success; our risked value was
$1.85/share, so the failure has a material impact on our valuation.
?? Focus moves on to the 110 mmbbl Bilby prospect
The Bilby well is targeting mean oil volumes of 110 mmbbl. Pacific Rubiales,
farminee to the Kangaroo and Emu exploration wells, has an option to acquire a
35% interest in the Bilbly prospect, and will be making a decision whether to
exercise this option over the coming weeks.
?? Maintain Buy: Disappointment over the Emu result, but don’t forget Peru
Karoon has a busy 12 months of drilling ahead, with the Bilby well in Brazil about
to spud, up to 3 wells offshore Peru and a further 2-5 wells in the Browse Basin.
We also anticipate a follow up appraisal well at the Kangaroo oil discovery in the
Santos Basin later in 2013. FY13 earnings have been increased by 25% after we
factor in 1H13 results, though this is largely immaterial in our view.
?? Valuation: $6.45 (was $8.00) at 10%
Our valuation is based on a risked DCF of an LNG development utilising gas from
the Poseidon gas field, as well as risked exploration associated with Karoon’s
South American portfolio ($4.34/sh). Our Price Target has reduced to $6.45/share
as we incorporate the failure at the Emu well.

Excluded from our valuation is the remaining prospects identified offshore
Brazil and Peru. In total Karoon has estimated there are a total of 12 prospects in
Brazil (with 2 now drilled) and 19 in Peru. DeGolyer & MacNaughton estimated
that the best estimate prospective resource in these prospects was 855 mmbbl in
Brazil and 1,593 mmbbl in Peru.
Valuation update: Our valuation and Price Target has reduced to $6.45/share
(from $8.00/share previously). The stock remains a buy in our view after today’s
share price decline, however we highlight the high level of share price volatility
anticipated throughout the upcoming exploration campaign, especially as the
results of the wells become known.