COE 0.00% 28.5¢ cooper energy limited

for the believers

  1. 1,747 Posts.
    Here's a good report.

    Regards M.

    Cooper Energy was listed during 2002 as
    an exploration play with a pure Cooper
    Basin focus. The company assembled a
    package of farm-in opportunities that provided investors
    with an active drilling programme and good probability of
    success. Cooper was successful in its initial exploration
    programme, participating with a 25% stake in the
    Sellicks-1 oil discovery that is now in commercial
    production. Another major round of drilling is set to
    commence in the Cooper Basin and the company will
    participate in several of these wells. We recommend
    Cooper Energy as a SPEC BUY for drilling activity.
    Cooper Energy is involved in six separate exploration
    permits within South Australia’s onshore Cooper Basin. The
    basin has undergone a major transformation in recent years
    following the offering for tender by the South Australian
    Government of large amounts of acreage that was previously
    held exclusively by Santos. Junior companies, including
    Beach and Stuart Petroleum, have keenly bid this acreage.
    This has in turn provided numerous farm-in opportunities
    for companies like Cooper Energy, who are able to be
    selective in terms of their equity participation.
    Another crucial aspect of the Cooper Basin that has
    contributed to the basin’s popularity and the subsequent
    upsurge in exploration activity is that it is an
    operationally-friendly place for junior companies to operate.
    Because of its onshore location and the proximity of existing
    infrastructure, the costs of drilling wells in the basin is
    relatively low and the costs in terms of commercialising
    discoveries are also relatively low. Thus, the NPV of oil and
    gas in the Cooper Basin is relatively much higher than
    elsewhere and compares favourably with another ‘junior
    friendly’ location, the Perth Basin. We estimate oil from the
    Cooper Basin would have an NPV of around A$20 a barrel.
    The company participated in the successful discovery of the
    Sellicks-1 oilfield in July 2002 in PEL-92, paying for 50%
    of the wells costs to earn a 25% stake. Sellicks flowed oil
    from the Permian-age Patchawarra Formation at a rate of
    1,915 barrels per day (bopd), which was the highest rate of
    flow from this formation anywhere in the Cooper Basin. The
    well has since been placed on production and flow rates
    have been gradually increased from 480 barrels to 630 bopd,
    with a target of 800 bopd. A second, deeper reservoir sand
    is likely to be brought into production in the future and
    upon completion will potentially boosts output to 1,000
    barrels per day, depending on reservoir behaviour.
    Oil is currently trucked to Santos’ Moomba production
    facility, but consideration is being given to the construction
    of a dedicated pipeline to Tantanna. As we have indicated,
    margins on oil from the basin are high and we anticipate a
    margin of A$25 per barrel over the life of the field. Based on
    current predicted recoverable reserves of 0.7m–1.2m barrels,
    Cooper Energy’s 25% stake is worth between $4.7m -$7.5m. This
    translates into total net earnings of between 9c and 14c per
    share for Cooper over next couple of years.
    The company will participate in an exciting series of wells
    over the remainder of 2003, comprising four firm wells and
    a possible fifth well. The first well, Christies-1, is
    anticipated to spud on June 16th and will be drilled in
    PEL-92, the same block that hosts the Sellicks-1 discovery.
    Christies-1 will be drilled 11km to the south of Sellicks-1
    and is considered to have potential for mean recoverable
    reserves of 1m barrels, making it a similar target to
    Sellicks. The company will fund 50% of the costs of the
    well in order to earn a 25% stake and will complete its
    required spending commitments with regard to the block.
    The company will then participate in the Eucalyptus-1 well
    in PEL-88, where it will earn a 40% stake by sole-funding
    the well, and the drilling of the Semaphore-1 well, where
    it will earn a 25% stake by funding 50% of well costs. Both
    wells have similar potential to Christies and Sellicks. The
    company may also benefit at no cost in Moana-1 drilled by
    Beach Petroleum, which straddles PEL-92 and PEL-107.
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