COMPANY CUE Energy Resources Ltd | CUE | $0.38/share RECOMMENDATION Buy | Very High Risk | $0.55/share target EVENT Artemis progress report: Expect to reach top of Calypso reservoir early next week KEY POINTS ? Progress of drilling has been good, current depth is ~1,870m with intermediate casing set. The Blow Out Preventer (BOP ? a critical piece of safety gear) and riser are currently being installed. ? MEO anticipates the next stage of drilling will commence on Friday 3rd Dec, after which the top of the Calypso reservoir should be reached within 2.5 days, so we could expect more news early next week. It is at this stage where we may possibly receive news of gas shows as the well approaches its target depth. ? The Calypso reservoir is the first of the two reservoirs targeted in the Artemis well. Calypso has a mean estimated recoverable gas potential of 6.4TCF. The lower formation, Legendre, has a mean potential recoverable gas estimate of 5.6TCF. ? CUE is free-carried through the current well. We risk-value Artemis (CUE 15%) at 18cps. Unrisked value is 72cps. Whilst exploration of this nature is always high-risk, success could be transformational for CUE. We have provided additional information on Artemis in our initiation report dated 17 November 2010. FY11F METRICS PER 13.1x | EV/EBITDA 6.3x | Yield 0.0% SENT TO CLIENTS No, please forward where interest Should you have any queries, please do not hesitate to contact me on +612 9233 9612.
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Recommendation Criteria
Investment View Austock Securities Investment View is based on an absolute 1-year total return equal to capital appreciation plus yield.
A Speculative recommendation is when a company has limited experience from which to derive a fundamental investment view.
Risk Rating Austock Securities Limited has a four tier Risk Rating System consisting of: Very High, High, Medium and Low. The Risk Rating is a subjective rating based on: Management Track Record, Forecasting Risk, Industry Risk and Financial Risk including cash flow analysis.
Disclosure of Economic Interests The views expressed in this research report accurately reflect the personal views of Stefan Hansen about the subject issuer and its securities. No part of the analyst's compensation was, is or will be directly or indirectly related to any recommendation or view expressed in this report. The following person(s) do not hold an economic interest in the securities covered in this report or other securities issued by the subject issuer which may influence this report: -the author of this report -a member of the immediate family of the author of this report
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MEO Price at posting:
43.5¢ Sentiment: Hold Disclosure: Held
