KPE management are on the cusp of unlocking value for shareholders.
Hence, Breakaway Research has a SPECULATIVE BUY recommendation on Kina Petroleum Corporation.
We initiate coverage of Kina Petroleum Corporation (KPE) with a price target of A$2.70ps. KPE offers investors good exposure to large upside from a portfolio
of onshore Papua New Guinea (PNG) assets. Petroleum Retention Licence (PRL) 21 (KPE 16.75%) contains the large undeveloped, Elevala-Ketu-Tingu (EKT) gas
and condensate fields. The commercialisation of EKT resource is a main driver of future value and could generate a potential share price re-rate. KPE’s
other exploration assets (10 Petroleum Prospecting Licences, PPLs) are prospective, but require additional funding to de-risk. If planned exploration delivers
one or more commercial outcomes, further upside could be unlocked from the portfolio of assets.
- Corporate re-positioning
- A 30:1 capital consolidation and re-domicile to the British Virgin Islands (BVI) in 1Q19 was designed to make KPE more attractive to international
investors, provide access to future capital and address mis-pricing.
- Strategic shareholder has track record in creating value and complements KPE’s deep technical experience.
- PRL 21 (EKT) - worth ~A$4.46ps, risked to KPE.
- Gross 2C Contingent Resource of 48mmbbl of liquids and ~1.1 tcf of gas.
- Liquids project with mid-scale LNG potential.
- awaiting FEED & Final Investment Decision (FID), and award of Production Development Licence (PDL).
- Resource of sufficient size, and robust economics means substantial value could be added. Project NPV (10) ~US$902m (gross), unrisked.
More details about Kina Petroleum
Official website: https://www.kinapetroleum.com/
ASX on Hotcooper: http://hotcopper.com.au/asx/KPE