Claren Energy Corp T.CEN

Canaccord comment this morning

[donofdubai]

Coastal Energy (CEN : TSX-V : $4.75) - Speculative Buy - Target: C$7.25
Frederick Kozak
Comment: Offshore operational update; maintain SPECULATIVE BUY rating and C$7.25 target price

On April 7, Coastal provided an operational update regarding its offshore Thailand operations. Songkhla field production for Q1/10 averaged approximately 7,100 bbl/d while current production is approximately 9,500 bbl/d. The company also announced its Environmental Impact Assessment for the Bua Ban Field had been approved by the government, allowing for field development. Company production in Q1/10 was essentially in line with our estimate of 7,500 bbl/d, and the increase in current rates is also within our expectations as the company has completed the replacement of Songkhla downhole pumps. The Bua Ban EIA approval was expected, but it now appears that field development is going to be slightly later than originally expected as the company continues to drill on the Benjarong exploration structure. We maintain our SPECULATIVE BUY rating and C$7.25 target price, which is based on a sum of the parts valuation of the company's Proven plus Probable plus Possible (3P) reserves, as well as risked potential exploration upside associated with the company's inventory of exploration prospects. The next catalyst for Coastal will be exploration drilling results from the first well drilled into Benjarong structure, expected imminently. Should the first well be successful, two or more wells could be drilled before the company moves to development of the Bua Ban field.