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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area

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To: Crossy who wrote (9179)	4/21/2005 7:09:47 PM
From: RRainman9999	Read Replies (2) of 37387

Oil Search confirms that the basement find in Nabrajah-5 could be significant and increases production target Company: DNO Recommendation: BUY Share price: NOK 60 Target: NOK 80 Oil Search (DNO's partner in Block 43 in Yemen) published its quarterly results last night. They indicated that current production plans for Nabrajah would increase from an initial level of 5,000 b/d in Q3 to some 15,000 b/d in Q4. The previous production estimate was 10-12,000 b/d in Q405. In addition, Oil Search announced a new drilling program of up to 3 new appraisal/production wells targeting the Basement in Nabrajah over the next 6 months. This could add significant production next year, when production capacity can be expanded. We believe DNO will increase its average production from the current production level of some 14,000 b/d to more than 30,000 b/d next year (average production for 2006). There is significant upside to this figure, if the basement appraisal program turns out to be a success. Oil Search states that there are good indications of a large Basement closure at Nabrajah. Total and Nexen produce from Basement in the adjacent Block 14 and Block 10 (located just south of the Sharyoof block). We have assumed a 50% probability of a 50 mb find in the Basement of Nabrajah in our target price of NOK 80/share. If successful, we have to increase our NAV with appr. NOK 8/share. Conclusion: The Oil Search report published last night confirms the case of a significant Basement find in Nabrajah and supports our target price of NOK 80/share. If the current studies of the Basement turns out successful, we have to increase our target price from NOK 80 to NOK 88/share as we have only put a 50% probability of success in our expected NAV. Best regards, Martin Mølsæter

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