the most leveraged position to moroccan oil, page-43

EVENT:

· We initiate on Tangiers Petroleum (TPT.ASX) with a SPEC BUY recommendation and price target of $0.50/sh.
INVESTMENT HIGHLIGHTS:

· Free carried for first drill well and partnered with quality partner at Tarfaya, offshore Morocco: During 2012, TPT successfully completed a farm-out to Galp Energia at the Company’s flagship Tarfaya Block offshore Morocco worth up to US$41m and inclusive of the drilling of a well, expected in H1 CY14. Tarfaya is located in shallow waters with four drillable prospects and a total unrisked recoverable prospective resource of 867MMbbl (P50). Extensive seismic work has been completed at Tarfaya and oil shows/seeps are also evident on the block.

· Regional drilling set to intensify commencing from Q4 2013: H2 CY13 will mark the beginning of a renaissance period for the Moroccan O&G industry with operators planning to drill up to 10 wells commencing Q4 CY13. Cairn and Genel have already contracted rigs and Kosmos are actively seeking to secure a long term rig. Cairn is expected to be the first operator to drill a well in Q4 CY13. Majors now with a presence in Morocco include Galp, Total, Cairn, Kosmos, Chevron, Plains and Genel. The next 12
months will be a renaissance period for the Moroccan O&G industry, with regional drilling set to commence by Q4 2013. We recommend exposure to TPT leading into the regional exploration program.

· Exceptional leverage in a success case: One of the key attractions of the proposed maiden well is that it will be able to evaluate three prospects with P50 potential of 758MMbbl. The primary target is the Trident prospect which has a P50 resource of 423MMbbl. Our conceptual modelling for the Trident prospect has exceptional unrisked upside estimated to be $10.6/sh. We believe investors will not ignore the risk/reward proposition for too long and anticipate that in the lead up to drilling the share price is highly likely to correct sharply.