Reaffirmation, Strong BuyJune 10, 2010
Kevin Shaw, Wellington West
Highlights
Stella 2P Update Reaffirms Material Increase
in Column to 722 ft with 222 ft of Light Oil
• Stella appraisal increases IAE Company Reserves by 31% & 13% on 1P& 2P Stella well takes 1P from 4.7 to 10.2 mmboe net & 2P from8.9 to 14.4 mmboe net; total 2P now 42 mmboe w/ upside as fields move into production.
• Greater Stella Area (30 mmboe 2P) a key production “hub” after Athena
Stella 2P prize means “game on” for next major hub with Stella &Harrier
first, then Hurricane; total initial hub production ~18,000 boe/d net toIAE.
• IAE plans to grow production 5x in 5 years to reach 24,000 boe/d
New production to start every 12 months, including Athena (oil), Carna
(gas), Stella (oil, cond. & gas)), Harrier (cond. & gas) &Hurricane (oil).
• Reiterate $4.60 target on visible production ramp & Greater Stella area prize
IAE trading at ~0.4x our $4.91 risked NPV/sh est. & under $31k/flowing
boe assuming ~10,000 bopd with the addition of Athena in H1/2011.