LRL - revisiting my one and only mention so far on STT thread, finally looks set to lift off 17c base and move into 20's pre results imo
all about risk/reward
overhang has almost cleared with Camac holding 1.6m before this week (took a little longer than anticipated with around 12m absorbed by market without need to use buyback facility), seller should be out today if not already
drilling results at end of month/early December based on announcements
trading below cash
significant volume in UK overnight (3.6m) retreating a little to close near 18c
article from overnight
(LRL) - Ordos Basin
It's tough to beat the risk-reward profile of Leyshon Resources' ZJS5 well in central China's Ordos Basin. The company is spending $5m on an onshore, three-well drill program targeting a large unconventional gas reservoir, which independent consultant RISC estimates could hold between 1 trillion and 3.8 trillion cubic feet of tight gas. So while upside is high, downside is limited because the company is currently trading for less than cash. Even after the drill program, Leyshon could have as much as A$43m (£28m) in its treasury, compared with its current market capitalisation of £27.6m.
Moreover, Leyshon's 100-per-cent-owned licence lies in a major gas producing region with advanced infrastructure less than a dozen kilometres away, and several multi-trillion-cubic-feet gas discoveries in adjacent blocks.
An experienced drilling team from PetroChina is currently drilling the first well, expected to be completed by the end of November.
IC view: With all the right ingredients in place to capitalise on a potential discovery, Leyshon is a low-risk bet on unconventional exploration and China's growing energy demand. True, the geologic chance of success is about one in six, but the company's strong cash backing means this is a no-brainer. Speculative buy.
