Let me just clarify the last few lines of the Patos report: 'Initial Contingent Resource Estimate is Just Scraping the Surface', dated 10th Aug 2011.
SPECULATIVE BUY recommendation with price target of $0.21/sh.
Valuation of early stage resource plays can be arbitrary given the unknown paths (commercialisation and development costings). However with further certainty around the recoverable resource they have provided a heavily risked valuation for ADE’s net 4.8tcf of $0.21/sh based on a very conservative risking of 10% and low in-ground value of $1/boe. They suggest they will look to reassess these values as further information becomes available.
From an independent resource assessment, the Encounter-1 frac/flow test and the 1H 2012 pilot production wells will provide key catalysts.
The rest of the report just went thru figures we already know, but did suggest that a review of share price would be factored around ramp up in gas production (in general for eastern Australia) to meet large scale domestic and international demand which is expected to rise later.
amok
ADE Price at posting:
12.5¢ Sentiment: Hold Disclosure: Held
