From the wise-owl valuation...note dated 19/8/07..current reserves A$480M..new wells to be drilled, plenty more news ..Wise-owl have also applied a 14% discount to previous estimate of revenues @A$270M. There's now reserves of A$480M based on 13% of total area!!
Reserve upgrades in the wings. Red Fork Energy released its maiden reserve estimate of 37.6 Bcfe (3P) in June, which is equivalent to more than A$270m in potential revenue. A busy schedule of drilling activity in the year ahead should lift reserves considerably and drive a further re-rating in the share price. Strong production ramp up. Red Fork Energy will drill 50 new wells over the next 12 months which will see news flow, earnings, as well as oil and gas production all rise. Share price yet to reflect earnings potential. Our DCF valuation ($0.95) reveals considerable upside in the share price should the company achieve its targets. Upside of this magnitude exists in our valuation despite employing a hefty discount rate of 14% on all cash flows. Our assumptions of future oil and gas prices and flow rates from new wells are also conservative, being below prices implied by forward curves and below rates achieved from existing wells....
RFE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
