40p target28 Mar 2013 10:53
Desire Petroleum (BUY, 40p) (DES LN, MCap: £56.9M, 16.625p) – Sea Lion the Only Certainty: Today’s full year results have highlighted the fact that the Company needs to find a partner to develop its asset base further, or raise more money, either way, the only certainty in the portfolio is the development of Sea Lion; Premier have already handed over cash relating to their entry in to the asset. Nevertheless, with an astute technical team and an increasingly attractive portfolio of prospects (high graded with the integration of drilling data), we believe that the Company is well placed to maximise in the next wave of exploration investment in the Falklands. We believe that there will be a hiatus until Sea Lion is sanctioned, and the drilling plan is better known, as all North and South Falklands Basin players will find it easier to leverage off of the lower mob/demob costs to better target their next campaign dollars. We believe that the portfolio is solid, backed with a good technical team, hence we are reiterating our BUY Recommendation and 40p Target price.
In this news:
Publication of complete CPR prepared by Senergy in November
Total Best Case contingent resources of 495 Bscf and 95 MMstb, net to Desire
Net Contingent resources of 178 Bscf and 85 MMstb assigned to Sea Lion Complex
Best Case unrisked prospective oil resources of 2.45 billion stb, net to Desire
Significant increase in Desire’s prospect inventory (45 prospects)
Licence extensions to 1 May 2016 agreed with Falkland Islands Government
Reduced loss for the year of $3.9 million
Cash of $10.5 million
Post period end, Desire has commenced a farm-out process to attract an industry partner
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