--The below is a company sponsored announcement--
Key Petroleum Limited ((KEY)) is emerging as one of
The company has a well-established position in the
Highlighting why there is interest in this region is
This resulted in Strike's market capitalisation soaring from less than
Shares in
While Key's price has come off following a drop in the oil price, it could provide a buying opportunity for investors who like targeting under the radar stocks.
Key's assets
Importantly, the group's
Beharra Deep, West Erregulla and Waitsia gas discoveries lie on trend to the south from the
Prospective resources for EP 437 and L7 now include the deeper Kingia/High Cliff Reservoirs, representing a material impact for the
The case for
While STX is one of only a handful of companies with acreage exposed to the Kingia/High Cliff play,
However, the most useful means of arriving at a fair valuation for
One of the most important factors in terms of assessing Key's investment metrics is its heavily discounted enterprise value relative to the likes of Strike and the smaller Norwest, which the has less to offer in the way of defined resources, yet trades at a significant premium to Key.
For example, Norwest has a mid-range estimated prospective gas resource of 92 billion cubic feet (BCF) at its EP 426 and EP 368 wells (net to Norwest - 20% stake).
This includes the Lockyer Deep-1 well which is a Kingia/High Cliff gas target with a 459Bcf mid case prospective gas resource (100%).
The
NWE has a 20% stake in this well and will contribute 20% of the cost.
Based solely on its gas resource, which exceeds that of Norwest by 60%, Key should be valued in the vicinity of
However, Key's enterprise value currently stands at approximately
Aside from its asset value, what makes Key all the more attractive is its ability to generate income from the company's services business while investing in its exploration pursuits, leaving the group less reliant on raising capital.
Cash flow generation could be strengthened further in the near term if management chooses to monetise the oil resource that is on offer at L7, as this can relatively cheaply be trucked to the Kwinana oil refinery.
Demand for both oil and gas is likely to strengthen in the coming years, which should highlight the
Earlier today the corporate announcement above was publicly released. FNArena is acting as a partner in distribution to broaden the reach. No journalists have been involved in the re-publication of this announcement.
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