Coastal Energy Corp~cen.v, cenjf.pk & ceo.l~ trade within Canada,USA & London~ current price around $5.64
We rate Coastal Energy with a strong buy rating & anticipate a huge move during 2011!
Coastal Energy engages in the acquisition and exploration of oil and gas properties in the Gulf of Thailand and onshore Thailand. CEN.V or CENJF.PK holds 100% WI in G5/43 and G5/50 blocks comprising a combined area of approximately 5000 sq. kilometers. The company also holds 12.6% WI in block EU-1 & E-5N located in the Sinphuhorm gas field as well as owns interest in various other exploration blocks.
Please visit Coastal's website and review the Nov. 2010 Corporate Presentation~ We believe just from reading this 26 page report you will become a believer & see just how cheap this oil and gas opportunity really is!
It is also important that you read the 2 most current press releases from the company as well~The Dec 8th corporate update and the Nov 18th 3rd Q report.
Third Quarter 2010 Highlights:
1. Average total company production of 11,795 boe/d including average offshore production of 10,065 bbl/d.
2. EBITDAX is $44.5 million, or .39/fully diluted share; up 49% sequentially and over 550% yoy.
3. Net income of $9.2 million, or .08/fully diluted share.
4. First production from the Bua Ban field in the Gulf of Thailand.
5. The closing of a $80 million senior secured revolving credit facility.
FOR THE 9 MONTHS REV EQUALED $160 MILLION VS $57 MILLION & NET INCOME/SH EQUALED .25 VS LOSS OF (.02).
113 million shares fully diluted and outstanding
market-cap-- $640 million
From Presentation: After-tax 2P NAV/sh (fully diluted)~$7.07~ It is our belief that this number is now much higher after the announcement in early Dec of a "new" discovery offshore~the Songkhla A-09 well was tested and flowed at approximately 2,000 bopd at 2/3 pump capacity.
The average Unrisked NAV/sh (including prospective resources) equals $25.00!
Company plans High impact exploration from Dec 2010 to June 2011( would anticipate capex plan to be announced during early Jan 2011 with exact plan of wells to be drilled)~ the area of interest will be testing over 150 mmbbl prospective resources.
1.4 million acres in the Gulf of Thailand and over 30 identified prospects (1 million acres is contiguous in the southern area of the block and the remaining 400k is contiguous in the northern area).
70% of the outstanding shares are owned by management and top 4 shareholders-Extremely Bulllish- huge sum of wealth invested in the success of Coastal Energy by management!
Rig is contracted through June 2011; expect 50% development drilling and 50% exploration drilling.
From presentation; CENJF.PK is currently producing 12,500 boepd and generating significant free cash flow which will finance its exploration and appraisal program as well as build cash on the balance sheet.
Company talks about the possibility of 361 mmboe from grand total offshore prospective and contingent resources~ an additional 80 mmboe ( from Coastal estimates) the 361 mmboe is an estimate from Huddleston & co. as of 12/31/2009.
Total 1P+2P+3P = 48.4 mmbbl
Total regional brokerage firm that we follow have placed a strong buy recommendation on Coastal Energy Company:
Stifel Nicolaus- Sept 15th target of $7.75 for 12 months target of 6X cash flow est. Dec 2010 update~ 12 month target raised to $8.25
Cannacord - Dec 2010 report target of $9.25 for 2011~ estimates $196 million in CF or $1.69 cf/sh and estimates $65 million net income or .57/fully diluted shares. If we assign a CF value of 6X a share price of $10.14 results.
Many investor types will not want to play because cenjf.pk or cen.v is not listed at present on a major exchange. Many will not play because it is foreign operation governed by a foreign law. Many will not want to play because they may not trust the audits or geological reports, Many will not play because he or she is just afraid!
The Auditor, Deloitte & Touche is ranked a top 5 Auditor in the world! ( Read the Annual report message for 2009~ visit website for report). When you look at management, property, CF, income/sh actual and potential, production and potential production and cannot see the discounted value in Coastal Energy~ then investing is not for you!
We rate Coast Energy Company with a Strong Buy Rating and believe that with higher oil prices and continued success offshore that the share price could easily double or triple from current depressed levels. We see almost zero downside risk at current levels and also believe that Coastal Energy would make for a juicy takeover candidate! We know that China and India are always looking for Oil worldwide and this company is just to cheap to ignore when there are some 360 mmboe potential resources within their acreage!
We believe that 2011 could reward investor again with quality returns. As long as interest rates remain low and inflation remains tame Wall Street will be rewarded. See little chance in the unemployed number dropping much below 9.2% for all of 2011. The extension of the "Bush Tax Cuts" will help, but the pork that was loaded into the bill is just plain disgusting~ our National debt stands at some $14 trillion~ that is some 90% of our economy! Obama does not favor Capitalism and business does not trust him or like his policies~ Business will not hire and this economy will slug along. The rest of the world except Europe and the US will recover much faster especially Asia, India and South America, which will keep crude prices firm & headed towards $100/barrel by the summer of 2011. NG is the sleeper and one day this fossil fuel will wake up and investors in this group will be rewarded ( cmt.to- favorite penny NG). Another penny oil that we find very interesting and is worth a nibble is Mart Resources (mmt.v or mauxf.pk~ .70), a Nigeria energy company. Visit their website and review the recent annual meeting 1 1/2 video conference~ www.martresources.com---very good and worth the play!
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