Mosaic Oil (MOS, TP A$0.24) BuyEBITDA was A$8.6m in FY09 (A$8.0m...

Mosaic Oil (MOS, TP A$0.24) Buy
EBITDA was A$8.6m in FY09 (A$8.0m FY08). After D&A (A$1.8m), impairment for
exploration (A$2.5m) and a payment of A$1.7m related to the employment contract of the
former MD, net profit was A$2.6m (A$4.1m previously).
Production for the year was up across the board, with gas sales of 2.3PJ, 83,667bbl
of oil and 3,908t of LPG. Production from the 100%-owned Silver Springs facility was
up 39%. It was the single largest contributor to attributable production, up 18% in
barrels of oil equivalent terms to 481kboe. MOS reported technical and commercial
work has commenced on underground storage of gas in the largely depleted Silver
Springs gas field, with potential for storage of CSG ramp-up gas and as a spot
market for gas develops. Mosaic also has a 28.57% interest in the Kimu gas field, in
the PNG foreland. Alex Parks, who was appointed CEO in August, is an experienced
petroleum engineer, most recently CEO of ASX-listed Otto Energy (OEL) with a strong
commercial background at a time when these strengths match MOS’s needs. Our
target price has declined 1cps to A$0.24 and our valuation falls to A$0.32 due to
changes to our valuation inputs.