following is post from Ben2010 on PVD thread FYI, current chart is on the recent weekend thread, hope u don't mind Ben 2010 to copy it here, a great informative post.
http://www.puravidaenergy.com.au/media/media/130803_Edison_-_Deal_almost_secured.pdf
2 August 2013
Investment summary: Deal almost secured
A two-well carry plus back costs puts Pura Vida Energy (PVD) top of the tree for farm-outs in one of the hottest exploration areas around, offshore Morocco. Completion of the deal, expected imminently, is a major catalyst, as is securing a rig for two wells to be drilled in 2014, kicking off with the 1.5bnboe Toubkal prospect. The farm-out implies a valuation of PVD in excess of A$4/share. While we do not expect equities to reflect industry valuations, a narrowing must be a possibility as drilling approaches.
Farm-out deal nearing completion
PVD’s investment thesis largely hangs on the opportunity to drill two wells offshore Morocco on its Mazagan permit in 2014. To fund this, it has agreed a farm-out with Plains E&P (now a Freeport-McMoRan Copper & Gold Inc. subsidiary), giving it a US$215m two-well carry and US$15m in cash in return for 52% of its previous 75% operated stake. In-principle approval has recently been given by the Moroccan government for the farm-out and we consider expected completion of the deal in the coming weeks is a major catalyst for investors. Beyond this, the main things to watch out for are a rig deal, especially if one can be secured for early-2014, ahead of proximate drilling in the region by Cairn, Kosmos and Genel from probably Q413.
Top terms secured for unique Miocene play
At c 1,500mmbbl gross (350mmbbl net post farm-out) mean recoverable prospective resources, the first drill target, Toubkal, represents a hefty opportunity in itself. Unlike PVD’s neighbours, who are chasing Jurassic carbonates and Cretaceous fans, Toubkal is a Miocene target offering investors differentiation from the main Moroccan activity. PVD has secured the most attractive terms of all the recent deals in Morocco, valuing the block at A$440m and PVD’s post-farm-out stake at $100m, well ahead of the current share price (even without the drill carry). Not content to rest on its laurels in Morocco, PVD has also picked up an 80% interest in a block offshore Gabon. This offers lower-risk appraisal/development (Loba 20mmboe gross) and both sub-salt and pre-salt exploration, although exploration drilling here is unlikely until late-2014 at the earliest.
Valuation: Trading at an 85% discount to farm-in
Current target prices range from A$1.78 to A$2.60 per share, suggesting three to four times upside to the current share price. This is not surprising given the Plains farm-in terms alone suggest PVD should be trading at c A$4.10. The stock market is ascribing significant discounts to industry deals at present, but an 85% discount is excessive and we could expect this to close as drilling approaches in 2014.
Pura Vida Energy
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