1RM Research RM Research Pty LtdCorporate Authorised...

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RM Research RM Research Pty Ltd
Corporate Authorised Representative
of RM Capital Pty Ltd
(AFSL 221938)
1175 Hay Street
WEST PERTH Western Australia 6005
TEL +61-8-9321-3277
FAX +61-8-9321-8399
MOB +61-(0) 412-220-159
e-mail: [email protected]
e-mail: [email protected]
web: www.rmcapital.com.au
Impress Ventures Limited (ASX: ITC)
Exploration programme underway….Production escalates ! 25th January 2006
Recommendation: Speculative Buy
S&P/ASX Sector: Small Resources
Pro-Forma Capital Structure:
*Proposing to issue 35M shares & 5M Options (2 years, 8 cents)
to Entek (subject to cer tain terms and conditions)
Directors / Senior Management
Mr Eddie Smith Non Executive.Chairman
Mr Douglas Jendry Executive Director
Mr Greg Smith Exploration Manager
Mr John Gillon Non Executive Director
Major Shareholders
Entity Shares
(M)
%
Zappia Nominees Pty Ltd 35.0 9.3
Persal & Co Investment P/L 11.7 3.1
BL & VRD Williams 11.0 2.9
Eddie Smith 23.0 6.1
John Gillon 16.7 4.4
Douglas Jendry 13.0 3.4
Share Price History:
Investment Highlights
Impress Ventures Limited (“Impress”) is embarking on an aggressive
exploration program in CY 2006 following thorough 3D Seismic of potential
prospects , including PELs 115/111/104 which may lead to a re-rating of the
Company in the near term;
Mirage and Ventura are currently producing in excess of 440 bopd (ITC 40%:
176 bopd);
The Mirage Well was discovered in 2004 and is expected to have
recoverable reserves of approximately 250,000 barrels to be produced over a
12 year period;
Recoverable reserves for Ventura are around 44,000 bbls to be produced
over a three year life;
Impress is endeavouring to increase P2 reserves to 3-4M bbls recoverable
(attributable reserves to ITC of 1.2M bbls valued @ A$33/ bbl) and to
discover a further 4M bbls from Wildcat drilling;
Impress recently completed a placement to raise A$2,050,000 via the issue
of 36,000,000 shares at 6 cents to provide additional working capital and to
fast track the CY 2006 drill program ;
RMR currently value Impress at A$0.087 per Share including a value of only
A$10.0M (or 2.6 cents per share) for exploration assets with upside to
A$0.26 to A$0.30 over the next 18 months. Comparisons with other Cooper
Basin players (Cooper Energy, Stuart Petroleum and Innaminka Petroleum)
support this valuation.
Comment
Impress is embarking on an aggressive exploration and development program
over CY 2006 which RMR are confident will not only significantly lift their reserve
inventory but also see a lift in production to 1,000 bopd by mid CY 2007. Given
current drilling success rate of 75%, RMR consider this production target is well
within the Company.
Valuation
ASSET 2P Reserves (ITC-40%) NPV
Minimum Maximum A$m
Production
-Ventura 0.06 0.636 $3.34
-Mirage 0.52 1.44 $15.70
Cash $5.90
Exploration $10.00
Corporate Overhead -$0.75
Liabilities (Entek debt) -$1.50
Valuation $32.69
VALUATION/Share (fully Diluted) $0.087
Share Price ($) A$0.082
Fully paid ordinary Shares (m) 375M*
Convertible Note (10%, $0.08 Sept 07) A$0.7M
Market Capitalisation (fully Dil) A$30.8M
Share Price Year High-Low ($) A$0.082-0.035
6
Impress have a 75% success rate in
Cooper basin to date…
…high impact oil prospects identified
CONCLUSION
Previous results give confidence for future discoveries - careful development of
existing prospects and a proficient management team led to enviable success for
Impress in PEL 115 drilling, resulting in 3 discoveries from only 4 wells drilled
(75% success).
· The company has been quick to acquire a meaningful 40% working
interest in its current permits following a careful evaluation program in
recent months. An aggressive drilling and appraisal program is
scheduled in 2006.
· The company has added further technical substance to its team with the
recent appointment of Greg Smith as exploration manager. Mr Smith is a
petroleum exploration consultant with over 30 years of oil and gas
exploration experience. Mr Smith previously held senior positions with
Santos Limited, Onocol, Ranger Oil and Arc Energy - Mr Smith will
continue to consult to Arc Energy on a part time basis.
· It is the Company’s intention to further strengthen the directors and
technical management within the next quarter;
· High impact oil prospects identified in PEL 111/104 have the potential to
lead to a major re-rating of the company in 2006.
· RMR consider the current valuation of A$0.087 to be conservative and
believe a short term target of +A$0.10 and an 18 month target of A$0.26
is achievable. Speculative Buy.