Mosaic Oil (MOS, TP A$0.24) Buy EBITDA was A$8.6m in FY09 (A$8.0m FY08). After D&A (A$1.8m), impairment for exploration (A$2.5m) and a payment of A$1.7m related to the employment contract of the former MD, net profit was A$2.6m (A$4.1m previously). Production for the year was up across the board, with gas sales of 2.3PJ, 83,667bbl of oil and 3,908t of LPG. Production from the 100%-owned Silver Springs facility was up 39%. It was the single largest contributor to attributable production, up 18% in barrels of oil equivalent terms to 481kboe. MOS reported technical and commercial work has commenced on underground storage of gas in the largely depleted Silver Springs gas field, with potential for storage of CSG ramp-up gas and as a spot market for gas develops. Mosaic also has a 28.57% interest in the Kimu gas field, in the PNG foreland. Alex Parks, who was appointed CEO in August, is an experienced petroleum engineer, most recently CEO of ASX-listed Otto Energy (OEL) with a strong commercial background at a time when these strengths match MOS’s needs. Our target price has declined 1cps to A$0.24 and our valuation falls to A$0.32 due to changes to our valuation inputs.
MOS Price at posting:
15.0¢ Sentiment: Buy Disclosure: Held
