Greenfields Petroleum Corporation – Initiation of Coverage
Rapidly growing low-cost production through revitalising mature fields
Houston-based Greenfields Petroleum (GNF) was established in 2008 to acquire interests in undeveloped oil and gas fields overseas. In 2009, GNF became involved in a Production Sharing Agreement (PSA) in the shallow Caspian Sea off Azerbaijan – an exciting relatively new address for oil & gas. Neighbours include supermajors BP and Total & who have proved up billion-barrel oil and multi-trillion cubic feet gas projects.
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Oil production expected to double to 10,000 boepd within 24 months
Following the collapse of the Soviet Union, Azerbaijan offered up its prime oil and gas projects to international companies. GNF now has an 80% interest in the impressive Bahar Project and is undertaking workover and recompletions to boost production to close on 18,000 boepd in 2020.
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Potential waterflood to begin in 2018 to further boost oil production
Waterflood will allow oil recoveries to be significantly improved and give the project a longer life. Existing infrastructure from previous operations will significantly reduce capex. Interpretation of new 3D seismic should help define the dynamic simulations allowing returns to be maximised.
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Exciting deeper plays to be farmed out to a major
At depth, GNF has enviable large-scale opportunities which represent highly attractive farm-in opportunities for a major E&P company. GNF should benefit from the upside without needing to finance this work.
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DCF analysis reveals upside potential of 300%
Discounting forecast cash flows from just the program of recompletions and workover gives a target price of C$0.62. We initiate coverage of Greenfields Petroleum with a Conviction buy stance.
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DISCLAIMER
Greenfields Petroleum Corporation is a research client of Align Research. Align Research and a director of Align Research own shares in Greenfields Petroleum Corporation. For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
| Year to Dec | 2015A | 2016A | 2017E | 2018E* |
|---|---|---|---|---|
| Revenue (US$m) | 1.56 | 15.23 | 42.32 | 88.52 |
| Net income (US$m) | (7.52) | 99.16 | (7.11) | 46.43 |
| EPS (US$) | (0.34) | 1.52 | (0.04) | 0.08 |