this was posted on QPN forum: by gods broker FYI new crew :)TSV,...

this was posted on QPN forum: by gods broker

FYI new crew :)




TSV, QPN, TNP

Recommendation: Transerv?s current share price is underpinned by an ongoing 10% interest in tight gas development at Warro, where Alcoa is funding field evaluation. Participation in the Amazon prospect holds speculative appeal. Success would underpin ongoing
cash requirements and would add significantly to its assessed value.

During a hiatus in drilling activity at its 10% held Warro tight gas field in the Perth Basin, Transerv has used its corporate connections with Quest Petroleum, combined
with a flow of new equity funds from the exercise of options, to take a 5% interest in the drilling of two, relatively moderate risk prospects on the Louisiana Gulf Coast to be drilled over the next 6 months. The larger Amazon prospect is expected to spud in October and is likely to take six weeks to drill to a total depth of 4,880 metres, testing several thick horizons of over-pressured sediments within an interpreted tilted fault
block structure where strong seismic AVO anomalism supports a case for discovery of gas at depth.

Amazon is estimated to be capable of holding 45 mmbbls of oil/condensate plus 450 Bcf of gas if hydrocarbons are present and discovery at this level would be worth 9 cps to Transerv for its 5% interest, while Quest would see a 20 cps uplift for its retained 15% and Tango would also have strong leverage of $1.81 per share for its 17.5% in the project.

The smaller Thames structure is situated on the flank of a salt feature and shows multiple layers of targets, again with seismic AVO anomalism supporting the case for
drilling. The Amazon wildcat is budgeted to cost US$8.2 million and TSV will be paying for 9% to earn its 5% equity. Partners give Amazon a 35% probability of success, which makes it moderate risk.

All ASX listed partners here have strong leverage to success on these relatively large targets. Key risks include the normal exploration type of risks and also an engineering risk, associated with drilling in highly over-pressured sediments.

Transerv has taken the stance that this is an achievable target and while there is no current need to spend funds on Warro, this opportunity is worth the risk and if successful could underpin the establishment of a sustaining cash flow to Transerv, which would reduce the need for ongoing new equity issues.

Others along the Gulf Coast, including Strike Energy, Golden Gate Resources and Grand Gulf have largely not met expectations from well-formulated, good looking prospects, which failed to deliver, so caution is always necessary in such speculative ventures.

TSV - Capital Structure
Shares 882.4 m.
Options 87.5 m.
Total 969.9 m.
Price 0.013 $
Market Cap 11.5 $ m.
Cash (est) 2.0 $ m.

Well oil gas Risk NPV NPV Cost
mmbbls Bcf % $m oil gas /BOE US$
Amazon 45 450 20% 1755 22 1.7 14.6 $ 8.0 $
Thames 6 57 20% 223 22 1.6 14.4 $ 5.0 $
Source: Strachan Corporate

Permits TSV QPN TNP
Amazon 5% 15% 17.5%
Thames 5% 15% 17.5%
Discovery Value/share $ TSV QPN TNP
Amazon 0.09 0.20 1.81
Thames 0.01 0.03 0.23
Risk Adjusted Value/Share 0.019 $ 0.042$ 0.38 $
Leverage/share TSV QPN TNP
Amazon 646% 1647% 1390%
Thames 82% 210% 177%
Combined 728% 1857% 1566%
Source: Strachan Corporate


$1.81 - $0.20 values options at $1.61!