Coro Energy – Initiation of Coverage
Highly compelling regional energy play in both renewables and gas benefitting from the rapidly growing SE Asian economies
Coro Energy is the old Saffron Energy, which joined AIM in February 2017 with onshore gas producing interests in Italy. Within 12 months a new management team had taken over, led by James Parsons as Chairman, bringing a brand-new strategy for expansion and transformational growth focused on South East Asia. Early 2019 saw Coro acquire a 15% interest in the Duyung PSC in a deal which involved helping to fund highly successful appraisal drilling which saw 2C resources grow by 79% to 495BCF (gross).
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Booming electricity demand in South East Asia fuelled by GDP growth
Growth in electricity demand in SE Asia is amongst the fastest in the world due to the rapidly rising population, rising incomes, industrialisation and urbanisation. Coro see enviable opportunities to supply this market with gas and renewable energy as coal generation still dominates.
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Positioned to supply gas to Singapore where premium prices are paid
Duyung PSC’s Mako Gas Field is one of the largest gas fields ever discovered in the West Natuna Basin, offshore Indonesia. It is a shallow single tank deposit that is technically low risk. Gas production could start in 2024.
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Big plans for energy storage backing highly cash generative projects
Coro has just taken a 20.3% stake in ion Ventures which has 250+Mw of battery storage projects in development in SE Asia and UK/Ireland. Coro has first right of refusal to fund each of ion’s clean energy projects in SE Asia, which is what NEDs James Parsons and Andrew Dennan are awfully good at.
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Upside of over 400% based almost solely on the Duyung PSC’s NPV
Our highly conservative valuation shows the potential. We initiate coverage of Coro Energy with a target price of 1.50p and Conviction Buy stance.
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RISK WARNING & DISCLAIMER
Coro Energy is a research client of Align Research. Align Research holds an interest in the shares of CORO. Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/
For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
| Year to Dec | 2018A | 2019A | 2020E | 2021E |
|---|---|---|---|---|
| Revenue ($'000) | - | - | - | - |
| PTP (US$'000) | (4,485) | (7,862) | (6,200) | (5,630) |
| EPS ($) | (0.008) | (0.010) | (0.008) | (0.007) |