RFE 0.00% 0.0¢ series 2018-1 reds trust

at 51cps valued at 121cps...bargain

  1. 8 Posts.
    Hi All,

    I can't believe this hasn't risen to Hartleys valuation. The valuation was done at 18th Dec and could have only got better since then. I know the market has been throwing its toys out of the bath water but come on, these guys have only been giving positive news, like todays announcement.It has to be time for a re-rate surely.
    Below is the first few pages of the valuation from Red Forks website.


    Hartleys Limited ABN 33 104 195 057 (AFSL 230052)
    18 December 2007

    ASX Code

    Share Price


    Market Cap (fully diluted)
    $45.2m ($59.6m)
    Issued Capital (fully diluted)
    90.3m shares (119.2m)
    Cash (as at 30 September 2007)
    Michael Fry (Chairman)
    David Prentice (Managing Director)
    Bruce Miller (Non-Exec. Director)
    Perry Gilstrap (Pres. USA Subsidiary)
    Top Two Shareholders
    Marble Bar Asset Management (18.2%)
    Golden Deeds Pty Ltd (10.1%)
    Resources Analyst
    David Wall
    Ph: +61 8 9268 2826
    [email protected]
    Red Fork Energy Limited (“Red Fork”, “RFE”, “Company”) is an
    onshore oil and gas explorer-producer with a large 100% owned
    landholding in Oklahoma, USA. The Company remains on schedule for
    its main low-risk, unconventional gas project. Red Fork is also targeting
    conventional upside in two out of five of its current wells, all likely to be
    completed in January 2008. An additional reserve is also expected in
    2008 following results from first phase drilling at West Tulsa. In
    addition, the Company is looking to accelerate its East Oklahoma
    project to begin in 2008 from 2009. This should see increased
    production and reserves earlier than anticipated. Red Fork’s proactive
    strategy keeps it ahead of the play, giving the Company a valuable
    strategic position in relation to owned and controlled infrastructure.
    Our modelling values Red Fork at $1.21/share. RFE has a low risk,
    proven strategy underpinning exposure to conventional upside, coupled
    with extensive experience. For these reasons we rate Red Fork
    Energy Limited as a Speculative Buy.
    Investment Highlights
    • Proven Play with Long Term Cash Flows – Typically,
    unconventional gas wells provide a stable source of ongoing cash,
    usually producing at steady rates for over 15 years. Red Fork’s
    wells are low cost and should payout in around 12 months.
    • Conventional Upside – Low incremental costs have the potential
    to unlock significant upside in conventional oil exploration targets.
    These zones will be drilled additionally to unconventional target
    zones in the current well program, reducing risk to very low levels.
    The conventional targets are analogous to nearby fields that are
    currently producing oil.
    • Certified Reserves With More on the Way – The Company has
    2P reserves of 36.4bcf from their Osage project with more
    expected in 2008 with the drilling of West Tulsa. Additionally, the
    Company’s East Oklahoma acreage is an order of magnitude
    larger in size than Osage and has the potential to increase
    reserves significantly. Higher proven reserves should see a rerating
    in the future.
    • Experienced Management – Red Fork’s management team has
    over 50 years experience in conventional and unconventional oil
    and gas in the US. This gives Red Fork a competitive advantage
    through well established relationships, which facilitate attainment
    of leasing agreements and service contracts. Technical expertise
    is world class, with over 400 similar wells previously managed.
    • On Schedule – Drilling is on schedule for the current program.
    Steady news flow is expected, with five wells to be completed in
    January 2008 and continued drilling throughout the year.
    • Proactive Strategy – Red Fork seeks to gain strategic
    infrastructure ownership and control by developing areas that are
    yet to be targeted by major companies. This infrastructure has the
    potential to add future value by delivering tolling revenue from third
    parties or through divestment.
    • Valuation 121cps – Our modelling of future cash flows uses
    conservative assumptions around a known, low risk play. We have
    used higher than Company guidance decline rates, only ten years
    of modelled cash flow and a long term flat gas price of $7 per
    mmbtu. These all indicate that there is room for increased
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.