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By Tom Winnifrith | Thursday 11 January 2018
Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
We own these shares but Zac "The Knife" Phillips is the City's No 1 oil analyst so we have an excuse for flagging up his latest note. His employer, SP Angel, is also shop to Curzon (CZN) so even the great Zac cannot be deemed impartial. However, the leader of the free world has done another "beautiful" thing, slashing US tax rates. Zac opines:
Curzon Energy $47.9mm (49p) – Making Good Progress: Today the Company updates the market on its progress at its Coos Bay Coal Bed Methane (“CBM”) project.
We believe that the pace with which the Company has moved to connecting the field infrastructure and commencing the workover programme underlines the priority that Management place on generating shareholder returns.
While the elapsed time to this point has been short, it must be remembered that testing on CBM projects is often longer than for a nominally identical well from sandstone, or more conventional reservoirs. Updating for the 2018 commodity and currency outlook, given the mechanics of the Oregon gas market that Curzon will sell into, the valuation is unchanged at $32.5mm, but the stronger sterling (2018: ~$1.35/£) weakens the per share valuation to 33p ( TW Note it was 37p prior).
However, both these effects are offset by the US’ tax law revision, which sees the tax rate decline from 35% to 21%, adding 47% to the valuation through a combination of an increase in our estimate of Economically Recoverable Contingent Resources and retention of more cash within the company. Our valuation now stands at $47.9mm (49p).
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