Recommendation
With a relatively large land base, low-risk conventional portfolio and exposure to
more than 200 MMB of shale oil potential in Turkey, Anatolia provides investors
with potential upside many times greater than the Company’s current stock
price and market capital. We are maintaining our Buy (S) rating and increasing
our target to $1.00 from
.75 previously on the updated resource report
Financial Flexibility: At the end of Q1/12, Anatolia had positive working capital of $5.7 MM. Based on our
estimates, the Company will have net debt of $4.1 MM at the end of 2012 and $24.8 MM at the end of
2013.
Guidance/Estimates: Our production estimates for 2012 and 2013 remain unchanged with yesterday’s
announcement.
Valuation:
• We are valuing the Company using a NAV + risked NPV approach, which assigns a risked value to
the Company’s near- and long-term development opportunities.
• We had previously used 24.9 MMB of potential unconventional resources (Company working interest)
at Bismil in our risked NPV. With the updated resource report (206 MMB), our NAV + risked NPV
estimate increases to $1.01 from
.78 previously and is the basis for our new $1.00 target price.
Conclusion:
• Operating in Turkey, one of the most attractive fiscal and political regimes in Europe/Asia, Anatolia
combines low-risk conventional prospects with unconventional shale oil prospects that could
ultimately rival those being developed in North and South America.
• The material increase in potential recoverable resources on Company lands reported by Ryder Scott
reaffirms our view that Anatolia provides investors with potential upside disproportionate to the
current market capital of the Company.
• We are maintaining our Buy (S) rating and increasing our target price on Anatolia to $1.00 from
.75
with the Ryder Scott resource report