valued 48c, un-risked >$2

Red Leaf Securities
We see STX as a strong candidate for takeover and a farm-out process could be the trigger to catalyse a bid given the access that would be provided to the technical and evaluation data. The stock looks significantly undervalued on our forecasts and we suggest the sector, particularly with respect to gas supply options is prime for consolidation, in a market squeezed on supply.
With >300PJ of gas agreements in place, the next key event is demonstrating commercial gas flow to convert contingent gas to a bankable reserves base.
Importantly successful delivery of 2P reserves provides a look-through to the remainder of the Cooper Basin assets. The current share price is underpinned by a risk weighted value of the SCBGP only, which commercialises only some 500PJ of a potential net resource of >4500PJ (>4.5Tcf).

We value the stock at A$0.48/share of which A$0.45/share we attribute to the Cooper Basin gas play and note on an un-risked basis the upside could be in the order of >A$2.00.