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Aurelian Oil & Gas (LON:AUL) has published a Competent Person’s Report on its hydrocarbon properties in Poland, Slovakia and Romania in which it has an interest.
RPS Energy Consultants has put the contingent resources at Siekierki in Poland, where the company has a 90 per cent net working interest, at 79.4 billion cubic feet of gas in the low estimate category 1C – 71.4 Bncf net to Aurelian.
The best estimate figure 2C is 345.6 Bncf, or 311 Bncf net to the company, and the high estimate stands at 1,142.5 Bncf, 1,028.2 net to Aurelian.
The prospective gas resources across the projects in Poland, Romania and Slovakia stand at 55.8 billion standard cubic feet in the low estimate category P90, 223.4 Bscf in the best estimate category P50 and 706.5 Bscf in the high estimate category P10.
Of these, net attributable to Aurelian are 36.5 Bscf in P90, 142.2 Bscf in P50 and 415.7 in P10, respectively.
The gross prospective oil and liquids resources for the properties in Poland and Romania are estimated at 5.6 million barrels P90, 20.9 MMbbls P50 and 63.9 MMbbls P10.
Attributable to Aurelian are 2.5 MMbbls P90, 9.5 MMbbls P50 and 27.8 MMbbls P10.
Andrew Matharu at Westhouse Securities noted that the contingent 2C resources attributable to Aurelian’s flagship unconventional gas project in Poland, Siekierki, have increased slightly to 311 bncf from the 296 bncf that the company was carrying previously for the asset.
The analyst also said that, of the remaining prospective resources the majority are located in Poland and will require validation of fracture stimulated well programmes to deliver commercial flowrates, something that Aurelian, along with many of its other Central-Eastern European peers, have yet to do.
The post-tax valuation of Aurelian’s contingent resources are reported as €364 million by the CPR.
Given the technical risks of delivering the Siekierki project, Matharu has applied an “exploration style” discount of 75 per cent to yield a project net Present Value of £72.8 million.
“Given the net cash position of £50 million the company has an enterprise value of £44 million suggesting there is material upside to the current valuation. The key factor in realising this upside is a demonstration by management that it is able to deliver commercial flowrates from its material contingent resource base or partnering with an accomplished operator of unconventional resources in order to do so,” the analyst said.
Seymour Pierce covered Aurelian in its Morning Meeting report today.
Oil and gas analyst Sam Wahab also pointed to the contingent resources upgrade to Siekierki, Aurelian’s key asset which remains the market’s focus.
Today’s CPR illustrates that the commercial value of this asset far exceeds that of Aurelian’s remaining portfolio, he said.
“We remain BUYers, noting that the shares are trading well below the company’s core asset value, with a 31p target price,” Wahab added.
Aurelian was last trading at 17.9 pence.