research out today

Anyone have any thoughts on this one? Thought I might have a crack at it based on this broker research out today.

Research today
Comet Ridge Limited (COI)
Share Price: $0.31
Recommendation: Buy
Valuation: $0.91
Market Cap: $39.4 (fully diluted)
Risk Rating: High
Irina McCreadie writes… Please note the Analyst holds shares in COI.
Ready for a take off…
We are initiating coverage on Comet Ridge with a Buy recommendation. We believe COI offers an exceptional leverage potential to success with developing its well balanced oil & gas asset portfolio. Our fully risked valuation of $0.91 is comprised of $0.11 attributed to liquid assets and corporate, $0.27 attributed to oil development projects, and $0.53 value we place on the company’s gas exploration assets. The company’s portfolio is comprised of the following key projects: • Tow Creek / Bear River / Florence oil projects, USA-Colorado, 26%-37.5% working interest (WI), Operator. These are rehabilitation projects on old oil fields in fractured reservoirs targeting 2-5 million barrels potential resource (Net). A three well “proof of concept” drilling program is underway, with an aim to prove that the modern drilling and completion techniques can achieve commercial production of oil by-passed by historical wells. Initial results from the first well have been very encouraging. • Cedar Creek / Vader gas and Coal Seam Gas (CSG) projects, USA-Washington State, 40% WI, non-operator. The area under lease has been subject to extensive coal exploration drilling that provides an excellent basis for CSG exploration, scheduled to commence in early 2007. • Grays Harbor conventional gas and oil project, USA - Washington State, 100% WI, Operator. This project has over 30 leads with a massive gas resource potential of 50-250 Bcf per lead. Of the 40+ wells drilled on the acreage before mid-1980s, most saw indications of hydrocarbons including a well that experienced a blow out. Exploration drilling is planned for late 2007. • Mahalo CSG project, Queensland, 40%, non-operator. The project offers 220-990 Bcf gross resource potential – however we do not expect any meaningful developments at the project for the next 12-18 months. Material success with any of these project areas should provide a catalyst for re-rating of the company. Inaugural production and cash flows are expected in early 2007. With around $10m cash on hand, the company’s near term activities are well funded. A busy program kicked off in late 2006 and is aimed towards developing the Tow Creek / Bear River / Florence acreage, and proving up potentially company changing conventional and coal seam gas resources at Grays Harbor and Cedar Creek / Vader projects. We view the Mahalo project as a sleeper in the portfolio following recent disappointing drilling result - however the resource potential remains intact. Managed by a team with substantial operations experience, Comet Ridge’s well balanced asset portfolio offers investors significant appreciation potential, while limited number of shares on issue spells potential material leverage to success.