TSXV:CEN.H - Post by User
Post by
retiredcfon Oct 17, 2012 7:27am
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Post# 20492146
CIBC Reaction
CIBC Reaction
| Coastal Energy Company A-13 Finds 67ft Oil Pay - Better Than Risked Est. But Not Unrisked Est. |
| ? Coastal Energy (CEN) provided an update indicating 1) success in the Songkhla A-13 well, 2) new mobile offshore production units at Bua Ban North and South, 3) a progress update on the 3D seismic acquisition program (60% complete), 4) an upsized credit facility ($200 million). ? CEN's A-13 well had big pre-drill potential due to the offsetting A-10 well that encountered 213 ft of pay in a separate block. News that A-13 encountered 67 ft of pay is good, but not outstanding. We expected 36% chance of encountering 7.25 MMBbl (464 acres, 70 ft pay at 18% porosity). ? We believe that the result exceeds our risked expectations, but are waiting for the appraisal well and production test results to further de-risk the prospect. On the production front they have MOPU's moving around, which could mean some production downtime in September. ? We have lowered our Q3/12 oil production from 20.2 MBbl/d to 19.6 MBbl/d, which has a negligible effect of FY12 numbers after incorporating slightly higher gas estimates. CEN continues to be our top pick in the international space. We reiterate our SO rating and $22.50 target. |