Why DLS is so Under Valued, page-6

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eshmun

11,185 Posts.

2609

05/09/15

14:41

Post #: 15941421
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Originally posted by Autosime ↑

Hi Folks
Firstly let me say I am looking at entering atound these levels , however the reality it at current Poo DLS is priced about right. The problem DLS face is they will pump out a good proportion of their oil reserves as the worst time , so even if Oil price recovers , the production profile will be much lower . In an effort to maintain cash flows they have reduced capex which means reserve replacement near impossible

As for Bigals argument , the only part I disagree with is the reserve prodiction profile have a much longer tail so the last 35_40% of reserves will trickle out over 6-8 years .

The other part about a corporate play is stokes may be looking at a merger which may be done on a Nil premium basis so you may not see a TO in the traditional sense .

Lastly - at present many companies of good assets on the market so it's a buyers market , and the buyers are generally cash strapped and not willing to pay too much for these assets

Having said all that I think DLS is a fair bet at these levels but simply on the view medium term oil price will be 60-70 and Aud will stay low

It's important to not until recently many DLS broker vacations are based on higher LT oil prices , these are currently being revised down which will see big changes to valuations . I know of one broking firm currently revising dLS price target down - now in 90s soon to go much lower

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Autosime,

The big unknown at this juncture is the US rate hike. If they are stupid enough to go down this path we could easily see some more gut wrenching falls on the markets and judging by the way the ASX energy sector has been sold off against the rising oil price trend it is likely we will see new lows made in oil stocks and the DLS share price IMO.

I'm positioning my own trading based on a relief rally sparked by further rate rise procrastination from the Fed (citing continuing slack in the jobs market) and a strengthening in the oil price to reflect a price of plus US$50 for WTI in the near term.

God help me on this DLS trade and the rest of the markets if I'm wrong and the Fed prove to make the worst mistake in history and send the world into a deep recession.

Eshmun

DLS Price at posting: 54.5¢ Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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Why DLS is so Under Valued, page-6

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