And has a good oil reserve close to shore with relatively low production costs that came slightly short of their hopes, but is still a large reserve is an excellent quality reefal vugular reservoir (fantastic porosity of 24% with net to gross also excellent at 90%). Though the other formations had water at the level they drilled, they were much deeper than expected, so they may still have oil down to the level prognosed prior to drilling. Don't forget that oil was found a up-dip in seahorse one - and they also have excellent reservoir quality - so they have three produceable formations (though will need to drill further up-dip to get it out of the lower formations.
Long-term this is worth a hold. The expected reserve of 5-10 million barrels at production cost of $30/barrel is huge with oil prices up around $120/barrel or likely much more by 2009. I make it's value to the company at about $300-600 million dollars after taking out development costs - not bad for a mc of $67 - and this will fund some drilling of the other potential excellent targets they own (and may find with recently completed seismics).
Note that a reserve of $4 million barrels in deeper water with higher production costs was recently sold by BPT for $120m, so surely TDOs reserves of 5-10m barrels is worth at least twice the current MC.
If reserves are greatly upgraded by a find at Wardie things are even better - this will be worth many dollars per share rather than the current $1.50 - $2 (even though SP is in the dumps). IMO on average you are much better off holding at this price than dumping it well below it's fair value.
Make your own decisions about whether to hold or dump, IMO the odds are stacked so much in favour of holding it is a screaming buy.
TDO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
