AWE Ltd

      AWE Details
 
Improving resource potential, ongoing cost reduction efforts: AWE Limited’s (ASX: AWE) delivered modest results during the September quarter, and the Waitsia, Senecio, Synaphea and Irwin gas fields’ gross combined 2P Reserves and 2C Resources improved to 721 Bcf. Waitsia-1 flow testing delivered a combined gas flow rate of more than 50 mmscf/d from the conventional Kingia and High Cliff Sandstone formations. Accordingly, AWE has resource potential of >22 years of production at current rates with net 2P Reserves of 114.4 mmboe, and 2C Resources of 121.9 mmboe with the ability to convert most of these assets to 2P within the short to medium term. Sugarloaf AMI also contributed to AWE’s Reserves and Resources of a combined 2P Reserves and 2C Resources of 65 mmboe. Meanwhile, AWE reported a 3% production decrease to 1.38 mmboe in third quarter of 2015 against the earlier quarter, due to initial flush production from the Pateke-4H well at Tui. However, BassGas production generated 23% increase driven by the Yolla-5 and 6 development wells while Sugarloaf production rose 7% as over 20 wells (gross) came to production. Meanwhile, AWE’s cost cutting initiatives also paid off during the quarter and the company was able to decrease Field opex by 21% and cut overall investment expenditure (exploration and development) by 29%. AWE reduced its staff by over 30% in its Sydney and New Plymouth offices and intends to shut the Jakarta project office by this year end. AWE is also offloading its non-core assets by divesting its 57.5% interest in the Cliff Head oil project to Elixir Petroleum.
 


 Third quarter Production highlights (Source: Company Reports)
                
Stock Performance: AWE reported a revenue decrease of 27% during the third quarter against the second quarter, impacted by the falling oil prices. The shares of AWE also plunged over 54.33% (as of November 06, 2015) in the last six months due to tough market conditions and slowdown impact in China.
 


Total Investment Expenditure (Source: Company Reports)
 
On the other hand, the group is implementing solid cost cutting initiatives and executed oil price hedging program for FY16 to boost its cash flow. We believe that investors need to use the recent correction as an opportunity to enter the stock, given its solid long term potential. Accordingly, we put a BUY recommendation for AWE at the current market price of   $0.66
 
 
AWE Daily Chart (Source: Thomson Reuters)
 

Buru Energy Ltd

              BRU Details
 
Positive exploration results: Buru Energy Limited (ASX: BRU) got the production license and started the production at Ungani. The group spudded Senagi-1 exploration well which is located at the exploration permit EP 458, 240kms south east of Broome and 144kms south east of the group’s Ungani Oilfield. The well has now been cored ahead in 3.98 inch hole to the total depth of 3,248 feet and wireline logs are currently being acquired. Buru also witnessed spudding of the Victory 1 exploration well and even started the Yakka Munga 3D seismic survey. For the Victory 1 well, the company has now performed additional well conditioning and logging runs have been attempted. The group commenced the Laurel formation tight gas exploration program and is also restructuring the coastal permits Farmin by infusing $4.9 million in cash. The group is testing and drilling the Praslin 1 exploration well.
 


Senagi 1 Location Map (Source: Company Reports)
 
On the other hand, the shares of Buru have been under pressure due to commodity prices volatility and the stock fell over 47.66% in the last six months alone (as at November 06, 2015). But, we estimate that the group’s exploration results (Senagi 1 and Victory 1 drilling program being on track) might deliver positive outcome in the coming months which could offer some support to the stock. We believe the recent correction has placed the stock at cheaper valuation and accordingly place a BUY recommendation on the stock at the current market price of  $0.28
 

BRU Daily Chart (Source: Thomson Reuters)
 

Cooper Energy Ltd

              COE Details
 
Gas projects contribution to drive growth: Cooper Energy Ltd. (ASX: COE) estimates its Gippsland gas projects to drive growth in the coming periods. The group reported about its first agreement for the sale of gas with O-I from the Sole gas project FEED and is also negotiating with several other buyers. COE is on track to get the relevant sales commitments for a Final Investment Decision on the Gippsland gas project by next year of June. Moreover, Manta gas fields are also captivating interest from gas buyers. Cooper Basin wells-Callawonga 10 and 11 were brought on line during the quarter, improving regional output in the region. Bunian-4 in Indonesia generated positive results while production from the KSO rose by 24% as compared to the last quarter. Meanwhile, Cooper Energy delivered 5% increase of production to 125 kbbl in first quarter of 2016 as compared to the previous quarter, but revenues fell by 45% to $7.6 million from $9.4 million in earlier quarter impacted by falling average oil price by 45% against prior corresponding period.
 


September quarter highlights (Source: Company Reports)
 
Stock Performance: The shares of Cooper declined by 39.13% during this year to date as lower oil prices impacted revenues. However, the stock rallied 27.27% (as of November 06, 2015) in the last four weeks partly driven by its sale gas agreements and even decreased operating costs to $33.16 per barrel during the first quarter of 2016.
 


Activities Planned (Source: Company Reports)
 
The group is seeking to get more agreements for gas supply which would further boost its revenues in the coming periods. We believe that the stock is trading at attractive valuations and based on the foregoing, we give a BUY recommendation on the stock at the current levels of $0.21
 

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