GLL 3.70% 84.0¢ galilee energy limited

Herewith some thoughts from this week's issue of the Oil & Gas...

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    Herewith some thoughts from this week's issue of the Oil & Gas Weekly

    Galilee Energy was up from $0.615 to $0.68 also on extraordinary volume for a small junior explorer. The shares traded at a new 12 months high of $0.705 on Friday.
    This past week Canaccord Genuity initiated coverage of Galilee Energy with a spec buy rating of $0.76 target price with an unrisked valuation of $2.20 per share. The Canaccord analyst like the Patersons’ analyst before him added that “Applying historic 2P transaction multiples (which are becoming increasingly relevant) to a 500 Pj booking yields $925 million or $4.80 per share.” Well maybe!
    Canaccord said should the company successfully convert its 2,508P of 2C Contingent Resource into reserves and subsequently supply gas to “the desperately short East Coast gas market” the result will be transformational for the company. (The OGW is not sure “desperately short” is accurate.)
    To do that the company needs a multi-million dollar full field development and a sales pipeline to take the gas to market. It is a long way from either of those achievements. In our view the broker valuations are based less on Galilee Energy proving up and producing gas and more on the sale of the asset to a larger entity.
    Given the disappointment with the variable productivity of coal seam gas assets bought in the last mad scramble for CSG to LNG prospects we doubt past valuations remain valid.
    Moreover, some would be buyers of Galilee Basin gas assets are now more interested in LNG receiving terminals in ports in the NSW, Victoria and South Australia a commercially more attractive investment than developing a greenfields stranded gas asset.
    Then too there is the Queensland government’s decision to offer new leases in the Surat and Bowen Basin where any gas produced must be sold on the domestic market. Senex’s Atlas project comes to mind. They are new.
    Lastly previous coal seam gas transactions were for csg to LNG projects and given all the controversy that has accompanied the development of the current three LNG facilities in Gladstone and their impact on gas prices in the domestic market we doubt that more facilities are likely to be approved even in the unlikely event they were proposed.
    Galilee Energy remains for us a high-risk momentum play supported by questionably accurate broker reports and chat room hype. That said the play may not be done yet. Who knows, given the current speculative enthusiasm for the stock, just how the market will react to the first gas that emerges from the pilot once the massive amounts of water currently being produced gives way to gas in early September."
    The other thing to remember is the large Arrow Energy csg asset is still there to be developed and its closer to market.
 
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Last
84.0¢
Change
0.030(3.70%)
Mkt cap ! $248.0M
Open High Low Value Volume
83.5¢ 88.0¢ 82.5¢ $1.034M 1.214M

Buyers (Bids)

No. Vol. Price($)
1 23424 83.0¢
 

Sellers (Offers)

Price($) Vol. No.
84.5¢ 25000 1
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Last trade - 16.10pm 10/05/2021 (20 minute delay) ?
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Last
84.0¢
  Change
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85.0¢ 88.0¢ 82.5¢ 309754
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