RBC Capital this morning 9 Jan 2014 16:58
posted on iii by DukeDosh
This note from RBC Capital this morning (courtesy of dcj on iv):
Heritage Oil (HOIL.L): Steady Progress at OML30
Heritage Oil this morning published a relatively upbeat operating update. 2013 revenues of
~$465m were slightly below our ~$500m forecast, but cash at year-end of ~$190m was as
forecast. Production from the OML30 licence, onshore Nigeria, is currently >50,000b/d (gross)
and all maintenance work is progressing as planned and management expects further increases
in output through H1/14, prior to the commencement of development drilling in H2/14. We are
currently assuming production of 55,000b/d (gross) from OML30 in 2014.
The company is also working up its exploration portfolio and first wells are planned in H2/14
in Papua New Guinea and Tanzania. We currently include no value for these opportunities in
our 373p/share Heritage PV12.5%.
We see significant upside potential at OML30, and believe Heritage’s project is analogous to the
first redevelopment projects in the North Sea, which enjoyed rapid and material gains as new
owners worked assets harder. Moreover, we take encourage from CEO (and major shareholder)
Tony Buckingham’s comment - operations on OML30 licence are providing significant revenues
and cash flow to Heritage which "will enable the Company to achieve its goal of paying a
sustainable dividend stream to shareholders". We believe that this objective resonates with
investors in the Production and Exploration sector through 2014+.
Source: Company release, RBC Insight
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