RE: Blackmont ReportFrom the Blackmont Report JUne 10
Successfully Tests Durango;
Next Catalyst North Piper;
Raising Target Price to $3.00
Executive Summary
Event
Earlier today Bridge Resources Corp. (BUK-TVX)
announced the successful completion and testing of the
Durango well located offshore in the UK Southern North
Sea. The well tested at 42.5 mmcf/d with 1,341 bbls/d of
61 degree API condensate through a 1-Inch choke with a
flowing wellhead pressure of 2,230 psi. Our updated risked
NPV10% for the Durango well is $1.00/share (diluted)
providing a solid foundation for the current stock price.
Effective with this report we are also transitioning analyst
coverage of Bridge to better align our research on the
company within our international portfolio. We are
therefore introducing new financial/operational estimates
for the company and are establishing a new target price of
$3.00/share.
Impact
This positive test result sets the stage for the company's
first large exploration effort. This should give the market
confidence in the technical capabilities of the Bridge
management team and their ability to execute the
company's strategic plan. Production from Durango is
scheduled to be on-stream later this year providing a
substantial cash flow stream to fund future exploration
and development.
Next Catalyst
The next catalyst for the stock will be the drilling of the
North Piper prospect which could spud as early as July 24
if the company is able to secure a rig from Chevron. That
well is estimated to take 20 days to drill and is targeting multiple oil-bearing horizons in a prospect located in the
UK Central North Sea. The combined prospect size is 585 mmbbls recoverable and our estimated risked NPV10% is
$1.29/share (diluted).
Valuation
Our target price of $3.00/share (diluted) is based on a 1.0 times multiple of our estimated net risked after-tax asset
value for the Durango, North Piper, and Aspen prospects only. Bridge has four other future exploration prospects
that could potentially add $2.00/share of value on a risked basis; but, we consider these prospects to be "Blue-Sky"
potential at this time given that drilling won't take place for some time.