Please find below the production data for FD #2H which was released at the AGM yesterday. Based on the performance to date, AZZ projects an Estimated Ultimate Recovery (EUR) from FD-2H of 350,000 barrels of oil equivalent (boe), which is inline with the EUR's estimated by EOG - the largest player on the Eagle Ford Shale.
Further announced from the AGM is that the company is in negotiations for further Eagle Ford Shale acreage acquisitions and that a second rig has been mobilised to the FD-5H location to commence drilling, which will accelerate the well drilling program and hence accelerate the statement of reserves.
From here we see two possible outcomes. Either (1) the market adjusts the share price upwards to correctly value the company based on its reserves or (2) if the share price continues to undervalue the company, then a corporate player will most likely buy the company for its reserves value/potential at a premium to the prevailing share price - similar to what we saw with the ADI/AWE takeover bid last week.
AZZ Price at posting:
62.0¢ Sentiment: Hold Disclosure: Held
