Not a lot of volume really and I suspect OIP just got caught up in the ESG enthusiasm for a couple of days. The thing that will move it is the start of CSG drilling in PEL 6 .. scheduled variously for mid-year, early second half, and now to commence 3rd quarter (that's now!).
I think the chances of OIP being taken over on its own are very slim given the fact that ESG will shortly have earned up to 75% equity in the 3 major leases by its farmin operations, and ESG holds 23% anyway of OIP. The chances of ESG being taken over are MUCH higher. No doubt if ESG is taken over OIP will be vaccumed up as well at some stage.
OIP is NOT the next ESG in my view simply because it has little money, and will end up with less than 25% of most leases. It was spun off by ESG to raise funds to drill the conventioal O&G prospects with the intention of claiming the CSG rights back again when possible .. as they are doing.
Having said that it IS cheap and they are large and very prospective leases adjoining both ESG to the south and the Qld mob to the north, and it is an extension of the Bowen and Surat basins. The quarterly shows some major new CSG prospects that look to me to potentially double current potential estimates of 3.5 TCF, so even if the total upside in OIP reserves that might be defined in the next 12 months is 1 TCF (25% of say 4TCF) .... at a low ball CR valuation of $0.30 per GJ that would be worth around $300m. Compare that to current market cap of $20m. So the potential upside is greater than ESG at $1.00, but the risk is far higher and the time-frame for a payoff may be a lot longer. Its probably one to buy a few 100k shares and put them away for a year!
Thailand? Mauritania perhaps??
H
OIP Price at posting:
16.0¢ Sentiment: LT Buy Disclosure: Held
