www.wildhorse.com.au
Wildhorse Energy Ltd (ASX: WHE) is an emerging alternative energy company focussed on developing underground coal gasification (‘UCG’) projects in Central Europe. The Company’s primary focus is to become a major supplier of fuel in the region by producing syngas as a feedstock for power stations located in close proximity to Wildhorse’s strategically located coal assets.
Wildhorse Energy on “cusp of providing an energy alternative that could rival shale”
Wildhorse Energy (LON:WHE, ASX:WHE) is “at the cusp of providing an energy alternative that could rival shale as a major indigenous gas source”. So said Liberum Capital, Wildhorse’s new house broker, as it initiated its coverage of the share today.
Liberum has set a price target of 91 pence for Wildhorse’s shares, which were trading at 13 pence each at lunchtime today.
The broker noted that Wilhorse has potentially more than one billion tonnes of coal resources in Hungary that are suitable for ‘underground coal gasification’ (UGC) and that it aims to secure further licences in Central Europe. The firm also has an estimated JORC-inferred resource of 77 million pounds of uranium.
Liberum also noted that Wildhorse has a management team (ex-Sasol/ex-Eskom) that has “world-class UGC experience”.
Since Wildhorse’s current valuation is accounted for by its uranium assets, Liberum said that investors “can access the company’s global leading UCG development team and potential coal resources for free”.
The UGC process turns stranded coal resources into syngas (or synthetic gas). Liberum said that there are three ways of monetising this syngas: using it as a valuable chemical feedstock; using it to generate power; and by separating hydrogen to form a valuable carbon-free fuel.
Wildhorse sees converting the syngas into power as the lowest-cost solution.
“We see UCG as a potentially disruptive energy source that could help change the shape of European gas markets in a way that shale was a game changer in the US – in 10 years a sample of shale gas players saw average total shareholder returns of over 500 per cent,” said the broker.
Liberum sees Wildhorse making an EBITDA-level loss of around €3 million for 2011 and in the next two years after before finally making a profit in 2014.
