Fat Prophetsí StockWatch: Cooper Energy
August 31 2006 - Australasian Investment Review Ė (AIR)
Fat Prophets believes Cooper Energy is starting to regain momentum following a solid production quarter that saw a 4 per cent increase in oil sales and record cash reserves of $24 million.
Recent exploration success has also boosted attributable oil reserves by 50 per cent to 1.2 million barrels.
FP believes the company is successfully addressing the issue of declining reserves and a seven-well drilling program targeting more than 200 million barrels of oil is underway.
Cooperís share price is consolidating following a correction from the all-time high last of May at 81 cents.
The company is an established and profitable junior oil company, with production sourced from the Cooper Basin in South Australia. The basin ranks as Australia's largest and longest-producing onshore oil and gas field.
In terms of FPís earnings outlook, we anticipate full-year net earnings of around $10 million, slightly below the previous year's $11 million figure due to exploration write-downs. For 2006/07, we anticipate an increase in net earnings to $12 million.
Cooper Energy therefore represents a significantly undervalued junior oil play. In FPís view, it is difficult to find a better value junior oil exposure.