roc positive on stronger cash position, page-13

From UBS

􀂄 Impact: Rating increased to Neutral; ’09 EPS f’cst reduced 31%
We have updated our June ’09 qtr forecasts with actual data and as a result our
2009 EPS forecast has reduced by 31%. Our 2010 and 2011 EPS forecasts
increase by 8.1% and 6.4% respectively. We have also revisited our Roc valuation
and made changes to corporate cost assumptions and the Zhao Dong capital
expenditure programme. As a result we have raised our price target to A$0.82
(prior A$0.47) and rating to Neutral (prior Sell).
􀂄 Outlook: Focus on operational and development targets
Roc is taking encouraging action to focus its business to meet operational and
development targets. It has reduced forward expenditure by farming down its high
equity stake in the Cabinda Block, onshore Angola. It has reduced Zhao Dong
development drilling, and also revised down the Basker-Manta development plan.
􀂄 Valuation: NAV/share A$0.71 (prior A$0.32) DCF at 10%
Our ROC NAV/share estimate is based on a DCF (10% nominal discount rate) of
forecast cash flow over the 2P reserve life of producing assets and all committed /
highly probable projects. Our price target of A$0.82 (prior A$0.47) is based on
our NAV estimate plus risk weighted project and reserves upside potential.