Why DLS is so Under Valued, page-7

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g12m0

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05/09/15

15:33

Post #: 15941523
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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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Auto
I misread your reference on future oil price. Nonetheless, my view is Tapis oil prices will be in the US$ 60 to 65 range and that should be good for Drillseach.
Also, Drillseach will not be building lots of infrastructure in PEL91 unless it is confident that oil production will last for another 10 good years and more.
Technological advances will make it easier to cream more oil in PEL91. Mark my word!

DLS Price at posting: 54.5¢ Sentiment: Sell Disclosure: Held
1 Upvote

0 Great analysis

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Why DLS is so Under Valued, page-7

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