Central Petroleum has announced the sale of half of its producing interests in the Amadeus Basin for $85m, which compares to Morgans valuation of $73m. The company intends to pay down -$30m of its debt facility.
Given the modest earnings profile from current Amadeus operations, the broker sees the deal as better positioning the company ahead of its next phase of investment. Funds will be required for both the Amadeus Basin and the Range CSG project in the Surat Basin.
In adjusting forward earnings estimates for the halving of equity production and strengthening of the balance sheet, the analyst lowers the target price to $0.13 from $0.15. The Hold rating is maintained.
Sector: Energy.
Target price is $0.13.Current Price is $0.12. Difference: $0.01 – (brackets indicate current price is over target). If CTP meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).
