Hmm 'isn't worth much' was a bit strong. What I meant by that is if they bomb out on exploration then what is the stocks fair value when compare to other stocks.
It does seem a bargain at $1.20 considering past performance. The risk is there, it always is. The upside from this price seems to be worth the risk though.
With the convertible note, whilst the $120ish (or whatever the exact figure is) is considered debt it really isn't an issue until 2018 (was that the correct year? I'm going off memory from a morning read) ~$7.2M/annum is payable to holders though and that must be serviced? According to the 2013 report that is serviceable with left over free cash flow based on revenue generated mostly from may onward, so this year should see a significant improvement in revenue and with similar cap ex as mentioned in reports/presentations (~$120million yeah?) should see a significant improvement in free cash flow.
The only real questions I need to answer to happily pull the trigger is how much is DLS currently worth (market thinks $1.215) and what will it realistically be worth in a years time?
I do like how it has significant room for a down movement in oil/gas price it seems.
I say ST Buy because I think it will perform well over the next 2-3 months providing it gets good drill results and revenue comes in at expectation or better. If that eventuates than LT Buy it will probably become.
As for a take over target, it will only likely be done by one of the Cooper Basin players, Beach doesn't seem big enough, perhaps one of the other 2?
DLS Price at posting:
$1.22 Sentiment: ST Buy Disclosure: Not Held
