Weekly Informer by fyx28874

VIEWS: 5 PAGES: 3

									        Weekly Informer
                                                                                                                                AUSTRALIAN EQUITIES RESEARCH




                                                    Analyst: Oliver Foster                                                 Published 22 February 2010

                                                    Cooper Energy Ltd (COE $0.50) Buy
                                                          Price Target: $0.80/sh

                                                          Reason For Update: Dec H’09 Profit Result

                                                          What we know:

                                                          COE recorded an NPAT of $7.9m (v’s our forecast of $8.0m).

                                                          The result was clean due to the limited impact of exploration write-offs during the period.

                                                          COE’s cash position was $95m at Dec 31’09.

                                                          What we think:

                                                          The Dec H profit result was excellent. It highlights the strong current operating
                                                          performance of its low cost Cooper Western Flank production (~1,500 bopd net to COE
                                                          @ 25% interest).

                                                          COE is exceptionally cheap based on forecast multiples (ex-cash). Our forecast FY’10
                                                          NPAT of $15m values COE at ~3.5x PER. Our forecast FY’10 operating cash flow is $22m or
                                                          <2.5x CF multiple.

                                                          We have deferred exploration write-offs associated with its Tunisian program into FY’11
                                                          in line with probable well timing (we choose to expense the majority of COE’s exploration
                                                          expenditure). This has increased our FY’10 NPAT by $7m (to $15m) and decreased our
                                                          FY’11 NPAT by the same to $6m.

                                                          On other activities:

                                                          There is no update on when Fuschia-1 will be drilled. COE is waiting on confirmation that
                                                          operator Storm Ventures International has secured a rig.

                                                          The planned Tunisian well details are:

                                                         •     Fuchsia-1 (COE 35%) is a 3D delineated offshore prospect targeting the 48 mmbbls
                                                               gross P50 recoverable (17 mmbbls net to COE) – success could be worth >$0.50/sh
                                                               to COE.

                                                         •     Menzel Horr-1 (COE 100%) is a 2D delineated onshore prospect targeting 24 mmbbls
                                                               gross P50 recoverable - success could be worth >$1.50/sh.

                                                          Wells costs net to COE assuming the current equity interests are US$7-10m (depending
                                                          on which rig is selected) and US$5m respectively.

                                                          An April spud date looks likely for its gas exploration well in Indonesia - Gigir East-1 (COE
                                                          30%), an onshore well will target 32 bcf gross recoverable gas (cost ~US$1.5m net to
                                                          COE) with success worth $0.10 – 0.15/sh.

                                                          As flagged previously, something to watch out for in coming months will be the
                                                          maturing of the West Hammamet project in the offshore portion of the Bargou Block
                                                          in Tunisia (COE 100%). It is an appraisal project that has the potential for 50 mmbbls
                                                          recoverable oil from two reservoirs intersected by a previous operator. A high resolution
                                                          3D seismic program has been acquired and will provide greater detail for volumes and
                                                          well placement for drilling potentially late CY’10/early CY’11. A farm out is possible this H
                                                          given the large upside/moderate risk.


All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
           account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
        Weekly Informer
                                                                                                                                AUSTRALIAN EQUITIES RESEARCH




                                                          Investment Case:

                                                          Upcoming catalysts for COE will centre on its Tunisian exploration drilling program. Rig
                                                          contracting, well spuds and results will be the main news flow items to look out for.
                                                          Trading opportunities should arise on the expected share price ramp-up prior to drilling
                                                          its high impact wells.

                                                          Few companies have the leverage to upcoming exploration wells that COE does in
                                                          Tunisia. In the success case, >$2/sh of additional value can be added from the two wells
                                                          drilled this year.

                                                          COE remains in great shape - production and cash are at near record levels and drilling
                                                          activity is drawing closer with a busy 18 months ahead likely. The stock is undervalued v’s
                                                          our valuation of $0.80/sh. Our valuation of cash ($95m) and proven developed reserves
                                                          is $0.52/sh.

                                                    Euroz Securities declares that it has acted as underwriter to and/or arranged an equity
                                                    issue in and/or provided corporate advice to Cooper Energy during the last year. Euroz
                                                    Securities has received a fee for these services.




All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
           account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
        Weekly Informer
                                                                                                                                   AUSTRALIAN EQUITIES RESEARCH




         COOPER ENERGY LTD (COE)                                     YEAR END 30 JUNE         PROFIT AND LOSS (A$m)        2009a Dec H’09f       2010f 2011f 2012f
         MARKET STATISTICS                                                                    Oil Equivalent Sales             42       22          43     42    31
                                                                                              Deferred Revenue                  -         -           -     -     -
         Share Price            $0.50 A$/sh  Directors                                        Interest Revenue                  4         2           4     3     4
         Issued Capital                      L Shervington                          Ch’n      Other Revenue                     0         -           -     -     -
             FP Ord                 292.4m   M Scott                                 MD       TOTAL REVENUE                   46        24          47    46    34
             Opt (@ $0.87/sh ave)     19.4m  G Hancock                           Exec Dir     Operating Costs                  11         7         14     14    10
                                             C Porter                        Non Exec Dir     Dep/Amort                         4         2           4     3     2
             Total Dil. FPOrd         292.6m S Abbott                        Non Exec Dir     Writeoffs (explor)               21         1           2    15     5
                                                                                              Corp O/H                          5         3           5     5     5
         Market Capitalisation         $146m         Shareholders                             Provisions                        -         -           -     -     -
         Enterprise Value               $51m         Acorn Capital                   6.6%     EBITDA                           25       13          24     23    16
         Debt                              nil       Aviva                           5.1%     EBIT                              1       10          17      5     9
         Cash                           $95m         Kinetic                         5.0%     Interest Expense                  -         -           -     -     -
                                                                                              NPBT                              5       11          21      8    12
                                                                                              Tax                               8         4           6     2     4
                                                                                              NPAT                            (3)         8         15      6     9
                                                                                              Minority Interest                 -         -           -     -     -
         ASSET VALUATION                                             A$m             A$/sh    NET PROFIT                      (3)        8          15      6     9
         Western Flank Fields (25%)                                     47             0.16   Net Abnormal Loss after Tax       -         -           -     -     -
         Worrior (30%)                                                   6             0.02   Net Profit After Abnormal        (3)        8          15      6     9
         South Madura PSC (30%)                                          2             0.01
         Bargou PSC (100%)                                              64             0.22   DIVISIONAL EBIT (A$m)        2009a Dec H’09f       2010f 2011f 2012ff
         Hammamet PSC (35%)                                             17             0.06   Western Flank fields              19       11          21     22    16
         Working Capital                                                 5             0.02   Worrior                           5         2           3     3     3
         Corporate                                                    (11)           (0.04)   Other (Corp & Expl’n)          (23)       (4)         (7)  (20)  (10)
         Exploration                                                    10             0.03   Total EBIT                        1       10          17      5     9
         Unpaid Capital                                                  0             0.00   CASH FLOW (A$m)              2009a Dec H’09f       2010f 2011f 2012f
         Debt                                                            -                -   + Net Profit                     (3)         8         15      6     9
         Cash                                                           95             0.32   + Working Capital Adjustment      -       (2)           -     -     -
                                                                                              + Dep/Amort                       4         2           4     3     2
         Total @ 10% nom                                             234              0.80    + Provisions, W/O                21         1           2    15     5
                                                                                              + Tax Expense                     8         4           6     2     4
         Total @ 0% nom                            251        0.86                            - Tax Paid                        8         4           6     3     5
         Total @ 5% nom                            241        0.83                            - Deferred Revenue                -         -           -     -     -
         Total @ 15% nom                           232        0.79                            = Operating Cashflow             22         9          22    24    15
         F/CAST PRODUCTION (A$m) 2009a Dec H’09f 2010f 2011f 2012f
         Attrib. Prod’n (mboe)                                                                -Capex + Development                 3         2        3        2      1
         Western Flank fields      390.1    229.7 435.0 380.3 252.9                            -Exploration                         7         6        8       23     10
         Worrior                   92.1     37.0  70.2  56.9 46.1                             -Assets Purchased                    9         -        -        -      -
         Total Attrib (mboe)     482.2     266.7 505.3 437.2 299.0                            +Asset Sales                        25         -        -        -      -
                                                                                              +Other                               -         -        -        -      -
         Assumptions                                                                          = Investing Cashflow                  7       (7)     (11)     (24)   (11)
         Avg Oil Price (US$/bbl)           69.8            72.2      76.1     87.5    90.0
         US$:A$                            0.75            0.87      0.89     0.90    0.87    + Equity Issues (Rts,plc,opts)       -        0        0         -      -
                                                                                              +Loan Drawdown/Receivable            -        -        -         -      -
         Cash Cost - excl royalties (A$m)                                                     +Other                               -        -        -         -      -
         Western Flank fields               8.2      4.8   9.1   8.0   5.3                     -Loan Repayment                      -        -        -         -      -
         Worrior                           2.1      0.8   1.6   1.3   1.1                     -Dividends                           -        -        -         -      -
         Ave Cash Cost (A$/boe)           21.4     21.3  21.3  21.3 21.3                      = Financing Cashflow                  -        0        0         -      -
         Ave Total Cost (A$/boe)          27.9     29.3  29.3  29.3 29.4
                                                                                              Period Surplus                      29        2       11       (0)     4
         RATIO ANALYSIS (A$m)           2009a Dec H’09f 2010f 2011f 2012f
         CF (A$m)                           22        9    22    24    15                     Adj. FX effects                      -         -       -     -     -
         CF / Sh (Ac/sh)                     7        3     7     8     5                     CASH                                93        95     104   104   108
         CF Ratio (x)                        6        -     7     6    10
                                                                                              BALANCE SHEET (A$m)              2009a Dec H’09f   2010f 2011f 2012f
         Earnings (A$m)                      (3)              8    15            6       9    Assets
         EPS (Ac/sh)                       (1.0)            2.7   5.0          2.0     2.9    Cash                                93       95      104      104    108
         EPS Growth (%)                  -141%              0% -620%         -61%     47%     Current Receivables                 12       14       14       14     14
         Earnings Ratio (x)                 (46)              -    10           25      17    Other Current Assets                 0        0        0        0      0
                                                                                              Non-Current Assets                  31       34       34       32     31
         E’prise Val. (A$m)                  35              51        42      44       40    Total Assets                       136      144      152      150    153
         EV : EBITDA (x)                      1               -         2       2        3
         EV : EBIT (x)                       40               -         2       9        5    Liabilities
                                                                                              Borrowings                           -        -        -        -      -
         Net Debt / ND+Eq (%)            -312%              0% -291% -305% -336%              Current Accounts Payable             5        6        6        6      6
         Interest Cover (x)                 n/a               -   n/a   n/a   n/a             Non-Current Liabilities              4        4        4        4      4
         EBIT Margin (%)                    2%              0%   40%   11% 28%                Other Liabilities                    4        2        2        2      2
         ROE (%)                           -2%              0%   10%    4%    6%              Total Liabilities                   13       12       12       12     12
         ROA (%)                            1%              0%   12%    3%    6%
                                                                                              Net Assets                         123      132      140      138    141
         Div. (Ac/sh)                            -            -          -       -        -   OIL RESERVES (1P)
         Div. payout ratio                       -            -          -       -        -                                                  Oil      Gas       Total
         Div. Yield                              -            -          -       -        -                                               mmbbls      bcf      mmboe
         Div. Franking                           -            -          -       -        -   Western Flank fields                            1.5        -         1.5
                                                                                              Worrior                                        0.4        -         0.4
                                                                                              Total                                          1.9        -         1.9
                                                                                              EV / boe (A$)                                                       27


All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
           account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.

								
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