patterson report : target 1.32

I have just read the report from Pattersons on this company and am interested. Having held INP for sometime and currently experiencing it's re-rating I am interested in Oil stocks which have the potential to do similar. INP made many shake their heads and wonder what was going on and when the sp fell to .54 now currently 1.18 it can truely mystify holders so hang in there MAE holders.

Like MAE, INP had problems and hold-ups with weather conditions, and I believe that these weather conditions (as the snow melts and yes it has been a long winter in the Nthrn Hemisphere - one of the reasons for high oil prices ironically) cond

Investment Highlights

• We are re-initiating coverage on MAE with a BUY recommendation and a price target of $1.32 per share. Our valuation is based on a risked and conservative estimate of future development plans and provides a discounted price target, set to appreciate as progress is achieved.
• MAE value is asset backed. Previous asset transactions in the US have averaged ~A$2.00/mscf with more recent sales at ~A$2.50/mscf. With 2P reserves net to MAE of 290 bcf, this implies a minimum value of $566m($1.62/sh). So while our base-case-value in use’ is currently $1.32, these transactions suggest a significant upside value. Hence the onus is on Marion to get behind the drill bit and develop more reserves, with estimated additional resource potential in excess of 1 tcf of recoverable gas. Note, Marion indicated in its December Half Yearly Report that they expect a significant upgrade when they review reserves in the second half of the year.

• Operations Back-on-Track. It is evident that severe winter weather conditions at the company's Utah operations has significantly delayed the build-up of gas production at Clear Creek and that earlier production targets were overly optimistic. The company has conservatively advised that average gross production for Q2-08 will be ~12 to 14mmscf/d as it builds up to 20mmscf/d and expects to be producing from 7 to 8 wells by the end of the quarter. With booked 2P reserves of 236bcf and the potential for 1tcf in resources, Clear Creek provides current asset backing, near term cash flow and upside future value.

• Gas Prices in the US above US$10.00. Marion has no existing sales agreements, allowing them to capitalise on current gas prices. Henry Hub 12-month future contracts have averaged US$10.30 over the last month, with Rocky Mountain gas in Utah and Oklahoma trading at discounts of
US$0.50-1.00 and 0-US$0.60, respectively.

I also believe that in selling the Oklahoma Gas assets they are will be cashed up to proceed with their work programmes for 2008. I understand also that they have much interest in these Assets and an announcement due early June (with bids closing late May).

So what am I missing with a sp of .72 and a target of $1.32 - upside must be any time soon?