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Sweetener from Vagabond

Sweetener from Vagabond

Doubling Assets Value

Additional assets acquisition would give more value to company, approximately 70% incremental Reserves from this acquisition. Total reserve 360mn (Currently) + 250mn (10% of Masela) = 610mn bbl, if @USD5/bbl, asset value is USD3bn versus USD1.6bn of enterprise value. Our simple and conservation valuation ENRG should value at Rp768/share

Nov, 4 2009 ENRG acquire 10% of Masela PSC Block

Press release today, ENRG acquired 10% interest in Masela PSC Block in Maluku and without detail cost acquisition and detail reserves. INPEX Masela Ltd is a Japanese company that become the operator of this block. Masela is expected to start production in 2016 with potential capacity of 4.5mn tons LNG and 13,000 barrel of condensate per day. According to ESDM (April 2009), 2P reserves in Masela’s Block is around 2.5bn barrel or equivalent to 260mn barrel additional reserves to ENRG by acquiring 10% of working interest.

Right Issue is good if Asset Increase

As of 1H09, gearing is around 2x with interest expenses of Rp327bn in 1H09 and negatively dragged earnings to net loss of Rp245bn. In my point of view, if company manage to raise capital from equity and pay-off the debt company would liberate enormous interest expenses and earnings turn to positive. Right Issue is bad only for punters that do not understand asset value.

Valuation: Wise man BUYS at discount

ENRG’s valuation is purely speculative. However if it is healthy, share price would not discount. Brilliant investor is looking at the company’s future not present. Nevertheless, value of asset is much more relevant in current situation. Let we assume company is running a right issue of Rp5tn and manage to reduce debt + acquisition cost. 360mn bbl + 250mn bbl is 610mn bbl of total reserves post acquisition. By assuming USD5/bbl Company assets is around USD3bn and minus USD600mn debts to become USD2.4bn versus market capitalization of USD1bn (Post Right Issue). Therefore, to simplify hesitation value ENRG should value at Rp768/share.

sumber : eTrading