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Central Petroleum Ltd

Exploration news flow from three significant Amadeus wells (Palm Valley Deep, and two Mereenie wells) and the Range production test/BFS will be delivered by December 2021, with the strong likelihood that one or more of these events will significantly impact Central’s share price positively, with the high potential impact Dingo Deep, Dukas and Orange 3 to follow in CY2022. The potential of Central’s portfolio has always been present, but the lack of funding has encouraged the market to ignore it. That will change in the next six months.

  • Central Petroleum is selling 50% of its producing assets for A$85M, payable as A$29M cash, which will immediately repay debt, A$21M liabilities assumed by the buyers, NZ Oil and Gas/Cue Petroleum, and A$35M in carried exploration costs. Central retains operatorship, and is able to drive investment spending with a free carried war chest of A$100M on a joint venture basis. NZOG is a substantial company that is highly likely to be supportive and sufficiently liquid.
  • The sale is almost value neutral with the loss of future cash flow offset by improved balance sheet and free carried exploration. The exploration plans have been public since 2019, but will be rapidly actioned with funding unlocked by the sell down.
  • Base Case Net Present Value is A$0.35/sh:
    • Existing balance sheet and operations A$0.15/sh
    • Exploration Projects A$0.20/sh
 

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More details about Central Petroleum Ltd

Official website: https://centralpetroleum.com.au/

ASX on Hotcooper: http://hotcopper.com.au/asx/CTP

Markets: Gas, Oil