Valuable mid-caps

MACQUARIE Private Wealth continues to see “attractive value” across Australia’s mid-cap energy stocks as it commented on forthcoming exploration wells in a report last week.

Blair Price

As part of its general view of the mid-cap sector, MPW said these stocks were trading at an average 51% discount to risked net asset values.

It views that the oil-exposed stocks of this grouping were trading at a value of $US62 per barrel compared to spot Brent prices of $106/bbl, and at an EV/2P (enterprise value divided by the proven and probable reserves) ratio of $14.3 barrels of oil equivalent compared to $19.2/boe for the large cap sector.

In regard to the planned wells on its radar, MPW rated Karoon Gas’ Grace-1 well in WA-314-P (90%) as a high-risk, high-reward play, and said the subsequent Poseidon North-1 well (40%) was likely to spud in the March quarter at the earliest.

Tap Oil’s 30%-owned Malida-1 well in the Gulf of Thailand was expected to spud this month after being “high graded” by a technical review.

MPW is also looking forward to fracking results from the Beach Energy-operated Holdfast-2 well in the Cooper Basin and expects AWE’s 42.5% owned Oi-1 well in offshore New Zealand to spud in December.

It also expects a December spud for Carnarvon Petroleum’s 20%-owned Phoenix South-1 well and said success there could add A14c per share to its net asset value of this company.

On the Anakin-1 well just within the Queensland border of the Central Unconventional Fairway, 40% owned by Drillsearch, MPW did not expect flow testing to occur until the second half of 2014.

It is also looking forward to the Whio-1 well in offshore New Zealand which is 17.5% owned by Horizon Oil. MPW expects this well to spud in the June quarter and said a discovery could be developed through a $US65 million ($A69.5 million) extended reach well from existing Maari field infrastructure.

MPW’s preferred picks of the mid-cap sector are Beach, AWE, Horizon and Karoon.