Cliff Head production at 75,327 bbls at an average production rate of 819 bopd: Cliff Head production fell due to field downtime as a result of the program to replace a section of the onshore water injection and crude oil pipeline. The average received oil price for the quarter was US$60.26 per barrel and lifting costs increased to US$38.21 from US$30.56 compared to the previous quarter which was mainly due to the lower production number.
Comprehensive Forward Program
Xanadu program is finally moving forward: We have been disappointed with the progress that has been made in appraising the Xanadu discovery considering the material value uplift that Xanadu represents for each of the JV partners. The planned shallow water seismic program is close to being finalised, and the operator has announced that they intend to re-enter the well in the fourth quarter of this calendar year.
Recommendation and Valuation
We value TEG on our base case assumptions at $0.31 a share and maintain our Buy recommendation. This assumes a low case outcome for Xanadu but does assume an upgrade to current the Cliff Head infield reserves of 3m bbls of oil. It is clear from the accompanying chart that the market is undervaluing TEG and in effect ignoring the value of State Gas, the current Cliff Head upgrade program and any value for the Xanadu discovery. The current market pricing seems to assume that these programs will not deliver any value to the business which in our view is an unlikely outcome given the state of the oil market and the quality of the underlying assets.
Disclosure and Disclaimer
This Research report, accurately expresses the personal view of the Author.
DJ Carmichael Pty Limited, members of the Research Team; including authors of this report, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report. DJ Carmichael Pty Limited and or its employees hold an immaterial holding in Triangle Energy Limited. DJ Carmichael Pty Ltd acts as Corporate Adviser to Triangle Energy Limited.
The Analyst owns shares in Triangle Energy Limited.
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SPECULATIVE BUY – Potential 10% or more outperformance, high risk
BUY – Potential 10% or more outperformance
HOLD – Potential 10% underperformance to 10% over performance
SELL – Potential 10% or more underperformance
Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months.
Stocks included in this report have their expected performance measured relative to the ASX All Ordinaries index. DJ Carmichael Pty Limited’s recommendation is made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.
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