yankee's Ratings

PANIC OUT by yankee on 27 Jul 2014 13:16

Price at rating: 33.00, now:

Dragon’s Den Star Piers Linney – A career of business failure revealed and the sham projection of his Outsourcery flotationr BY TOM WINNIFRITH | SUNDAY 27 JULY 2014r r 49r r r r r There is a new star on Dragon’s Den, Piers Linney. Yesterday I revealed HERE how his Outsourcery (OUT) firm on AIM is in very real danger of going tits up just 14 months after listing. But Piers is no stranger to business failure. The BBC thinks he is a Dragon with the Midas touch. Au contraire. Today I reveal the full extent of his career of business trainwrecks and the sham projections of the Outsourcery IPO.r r Here is what the BBC says about Piers:r r Piers started his first business when he was thirteen and, although he always wanted to be his own boss, began his career in law and finance. Piers is of Barbadian and English descent, growing up in a small mill town in Lancashire where he attended the local comprehensive. r r He went on to read Accounting and Law at the University of Manchester and qualified as a solicitor in the City of London in 1997, specialising in venture capital. He then worked in mergers and acquisitions at Credit Suisse r r Piers left the City in 2000 to start an Internet business and has since been involved in a wide range of businesses across technology, media and telecommunications as a founder, investor and adviser. r r In April 2007, with his business partner, he led the buyout of a mobile voice and data reseller, which became the sector leader. Through four acquisitions, a Cloud hosting company was created and the mobile business was sold in 2011 to focus on the Cloud opportunity. Outsourcery was floated on the Alternative Investment Market in May 2013. r r Piers has been recognised as one of the top 100 most influential black Britons. He lives in central London and supports a range of charities.r r Hmmm let’s start with that life in the Mill Town where he attended the local comprehensive. Not only black but clearly working class to boot, how the BBC must love him. It’s a shame he is not gay as that would tick all the boxes. Er… Piers (his real first name is Jonathan BTW) is the son of Derek (MA Cantab) an export executive and Norma a nurse. They live in a very pleasant edge of town close of detached houses. This is not exactly a grim Northern slum upbringing with communal outside lavatories is it? r r We move on to how Piers left the City in 2000 to start his own internet business. Didn’t everyone in 2000? Quoted in a verbal blow job piece in the Daily Mail last week, Linney stated: “When the internet came along, I saw it as a gold rush, so I had to get involved. I took my bonus in 2000 and walked out the door to set up on my own. My friends and family thought I was bananas.” How very rational. Linney’s venture was called Doctorsworld and owned Doctorsworld.com. It managed to secure initial funding and in 2001 was seeking a second round of £2 million promising that it would be profitable within a year. It did manage to file its accounts for 2001. But that was it. The company was dissolved.r r This was not Linney’s first failure as he hit 30. By then he had already been a director of six companies which had to be dissolved. And the track record has continued in a similar vein.r r Companies House records show that he has been a director of 32 firms that ended up folding. Among the standouts are Interactive Media Developments Ltd which was liquidated in 2007 with debts of £462,000. And he was company secretary of Itchy Media Ltd which was wound up owing £565,000.Others firms folded after six-figure losses. r r But what about the successes? Back to Companies House. Current directorships outside of Outsourcery are listed as The Powerlist Foundation but apparently that is classified as “The Company Not Trading” and Key Real Estate which was set up in October 2006 and is still going. Well done Piers. Its last accounts (2013) show cash nil, current liabilities £3,058 and er that is it. It appears to be worthless.r r So where did Linney make his money? He claims a £100 million fortune. Hmmmmm. Look to Towergate Capital a City corporate finance boutique registered with the FCA from October 2001 and which Piers - according to the FCA register - joined in July 2003. His background was a City boy and he stayed with Towergate full time until 2007 and in some capacity until 2010. I guess being a City boy helped pay the bills while business after business of which he was a director went tits up.r r And that brings us to Outsourcery which started off as a telecoms business bought out of DSG in 2007. A few other acquisitions followed but in 2011 that business was sold for £12 million which was kind of handy as the cloud business that Piers is building up eats cash like there is no tomorrow. But the IPO was meant to solve that. I quote from the prospectus in May 2013:r r As the Group’s revenues scale up, its current loss-making position will narrow towards profitability. The funds from the Placing will enable the Group to further consolidate its market leadership position and benefit from a range of competitive advantages as it exploits the significant market opportunity and grows its recurring revenue base. The Placing comprises the Company raising funds of £10.0 million (net of expenses) to fund it through to cash flow break-even.r r As it happened £13 million was raised. But fuck me the prospectus was just not true was it Piers? Within just seven months Outsourcery had to raise another £4.2 million. Had it not done that then as at the 31st December 2013 year end it would have had NEGATIVE net assets minus debt of c£1 million. In other words it would within seven months of flotation have been heading fast for the fate one associates with almost every other company Piers Linney has set up.r r So what’s the score now? In the next four days Linney will announce plans to refinance. The shares are more than two thirds down on the IPO price at 34p. As things stand cash+ trade receivables minus (trade payables and debt) is almost certainly less than zero. And that number is getting worse by the day. Profitability is three years away IF the company can raise £5 million and hit – much delayed – targets. r r Since it may go tits up and deserves to go tits up, since its prospectus was not true in terms of having enough cash to hit breakeven and since Piers Linney has a CV of business failures par excellence this company is clearly a sell. My target price is 1p.r r But perhaps I have got it wrong and the BBC has identified real talent. I leave you to judge with a couple of quotes from Linney himself. On the share price:r r “The City does not quite grasp the scale of the opportunity… Trying to explain what we do and the scale of opportunity to a generalist investor is very difficult…There is an obsession with what month next year are you going to be profitable.”r r Shucks I am just a generalist investor so I guess things like missing your sales targets, being almost tits up in a cash sense, not having a hope of making a profit for three years (best case scenario) despite what you said in your IPO just 14 months ago are all irrelevancies. Silly me. I just do not understand the genius of Piers.r r But it seems that other folks are waking up to the true genius of this modest man. Piers says:r r “I am now stopped on the street, people do recognise me,’ he says. But I am not at the Tom Cruise level yet.”r r Oh Piers, you are not yet as well-known as Tom Cruise. Not yet at least. How modest you are. Do you think that setting up a company that does NOT go tits up is your very own Mission Impossible?r r

BUY UJO by yankee on 22 Jul 2014 11:53

Price at rating: 0.34, now:

steelwatch 22 July'14 - 10:15 - 13 of 2503r r IRG looks about right for Italy valuations multi-bagger current price 2.55p JOKEr r ERG bids c.€63m (c.£53m)for Independent Resources (IRG)Rivara ...r SmallCap Network-19 hours agor 53m)for Independent Resources (IRG)Rivara Under Ground Gas Storage. ERG SpA, the minority shareholder of the joint venture company .r [link] r the management team at Independent Resources operates on a model that tightly integrates oil and gas exploration and storage.r IRG's model tightly integrates its upstream oil and gas assets in North Africa and Italy with the development of a major storage facility and sees this as a way to maximize its production projects as the basis of a business that returns a high value. Independent Resources has confidence that it's unique brand of partnerships and acquisitions, when tied to its assets result in a strong business model.r r At the moment, IRG is involved in many major projects including the Rivara underground gas storage facility. This project, which uses a naturally fractured deep reservoir in Italy's Po Valley, not only has gained government concessions, believes that this project will be a major step in alleviating a major hole in the gas distribution and storage system that has existed for some time.r This storage facility, when it is online will handle an estimated 3.2 billion cubic meters of natural gas. This, the company notes, would make it one of the largest storage facilities in both Italy and Europe. The key to profitability here would be building a long-term partnership on the project. The company believes the first stage of this will be online in about five years. At the moment, Independent Resources is partnering with ERG Rivara Storage srl, a subsidiary of ERG SpA, a leading Italian energy business.r Another business IRG is investigating is creating "shale gas". "Shale gas", an exploding trend in the United States, can be contained in not only coal beds but also in sedimentary rock, called carbonaceous shales, where the gas collects in micro-structures and fractures, is relatively easy to extract and can be extracted horizontally or vertically.r Independent Resources are involved in another, more limited coal bed methane from the Fiume Bruna parcel in Tuscany. It is quite an extensive project and is expected to extend south into their Casoni lease. It is a large reservoir and is also based on earlier mining efforts in the region which have substantial upgraded the reservoir's size.r In an effort to inject some environmental consciousness into this project, Independent Resources believes it will be able to inject CO2 into a coal bed to recover gas that would remain otherwise trapped. IRG believes there are many opportunities for this to be used to help cut the amount CO2 in the air.r As an oil developer, IRG holds an 18.97% percent interest in the Ksar Hadada block in Southeast Tunisia and it believes that recent discoveries of light oil in various structures will prove profitable from its Acacus well field in this area. IRG believes there is substantial profit from possible shale oil deposits in this area as there is believed to be significant "shale oil" (oil trapped in layers of shale) that may also be brought online.r Independent Resources is an oil and gas exploration company with a focus on CBM and gasr storage opportunities in Italy and a share of oil exploration activities is Tunisia. The companyr should be considered a good strategic investment. Italy is in gas deficit, Independent has gasr and, perhaps more notably, is seeking to develop strategically important storage facilitatesr that will help temper future gas shortages and ease security of supply. The valuation looksr underwritten by CBM assets with further upside in the form of very near term Tunisianr exploration and potentially, game changing upside if it is able to finally secure permitting forr its proposed Rivara gas storage operation. r r Better Politics Could Lead Italy Towards a Technologically Advanced Energy Marketr Italian Prime Minister Letta took an open-minded approach towards new energy resources, including shale gas, and we hope to see improvements on the technical investigation front in the coming months too. r r Do you know of any shale gas projects in Italy?r r The Independent Resources PLC project in Tuscany should be the only unconventional gas extraction project under way to date. It is believed that, besides Central Italy, there may be resources in the North (the Po Valley) and probably in other areas. However, deeper investigation is needed through specific studies. Regarding the first experiments carried out in Tuscany, the press has mentioned that Independent Resources PLC uses a “hydraulic fracture operation coupled with a ceramic proppant.r r What is the regulatory framework for shale gas operators in Italy? Are there any specific laws applicable only to shale gas operators (and not to companies involved exclusively in conventional gas activities)?r r There are no specific regulations concerning shale gas in Italy. r r ¾ CBM news: Recent news on the CBM front has been extremely positive. Not only did thisr confirm very gassy coal but also suggests shale gas potential and the ability to frac bothr zones enhancing their potential commerciality. In addition new licence applications couldr double the size of resource from around 92bcf currently. A minor negative is that ther additional zone will necessitate a new work programme and move back production but thisr is largely positive as such a programme will aim to enhance the production rate andr therefore value of the resource.r ¾ Free carry on Tunisian exploration: IRG has an 18.97% interest in the Petroceltic‐operatedr Ksar Hadada permit, onshore Southeast Tunisia. The Ksar conventional oil targets haver prospective* resources of 320mmbls, with a risk weighted potential of 43.7m for the firstr two wells (see section following). Seismic data completed in January identified a number ofr prospects and 2 (potentially 3) exploration wells are planned for this year, the first of whichr is due to spud in June/July this year with a second to follow immediately after.r Independent is fully carried through the 2010 work programme.r ¾ Storage, the long and winding road: Permitting in Italy is well known to be extremelyr protracted. When it involves a unique gas storage installation in Italy’s industrial heartland,r as in the case of the Rivara Under Ground Gas Storage, there are even more boxes to ber ticked. The prize though is substantial; the company estimates the post planning prospectr to be worth €300‐400m. The pre‐planning involvement of Italian national distributor ERGr greatly enhances the potential and provides a benchmark for valuation of c.€63m (c.£53m)r ‐ extrapolating the implied value of the €9.5m paid for its 15% stake.r ¾ Supportive management: Exec Chairman Grayson Nash holds c.15% of the company and,r as in past rounds, has supported the placing purchasing 200k shares.r ¾ Valuation: For now we value the company predominantly on the CBM and a typicallyr risked valuation for Tunisian exploration. We include very little value for the gas storager which offers considerable ‘post‐planning’ upside. Our price target of 143p thus equates to;r 66.7p CBM; 61.5p Tunisia exploration; 14.6p gas storager r Valuation overviewr Category £m Value Value P/pshr Tuscany CBM 30.5 66.7r Rivara Gas Storage 6.7 14.6r Tunisia Exploration 28.2 61.6r r Totals/Price target 65.4 143.0r Potential Share price Catalysts r Independent has potential for newsflow in relation to each of its 3 arms;r • Exploration, Tunisia: News on advancement and results of exploration in Tunisia, first up Oryxr • CBM, Tuscany: Advancement of work programme potential farm‐out of CBM assetsr • Gas Storage, Rivara: Granting of licences for gas storage in Rivara would have a material impact on valuation in our viewr CBM – Medium term, with excellent well recent results r IRG’s CBM acreage is located in Tuscany. Independent was awarded the Casoni exploration licence adjacent to the south ofr Fiume Bruna with the environmental impact study for the Casoni licence currently under review. Fiume Bruna has a prospectiver resource of 92 bcf. Independent has recently conducted hydraulic fracturing on the Fiume Bruna 2 well which yielded veryr positive results, suggesting a greater resource and an additional shale play.r The work programme is aimed at proving the commercial prospect for Fiume Bruna this year and recent fraccing results suggestr greater potential than originally envisaged. We have ascribed 66.7p of value of for the CBM assets, which accounts only for ther licenced acreage. We ascribe 83p per mcf of value for the assets and apply a 50% risk discount which also incorporates somer dilution for farm out (which now seems likely).r Tunisia Exploration – near term, with significant high risk exploration upside potentialr The Tunisian prospects are attractive late stage exportation opportunities with relatively high possibility of success (PoS) ofr >30%, which though still high risk is relatively attractive in terms of exploration. Two prospects are to be drilled this summer. Ther first prospect is Oryx (well scheduled to spud immanently). Oryx has P50 gross prospective recoverable resource estimate ofr 25mmbls and an ascribed possibility of success at 34%. Drilling the second and larger Sidi Toui prospect is expected to followr immediately. Sidi Toui has a P50 gross prospective recoverable resource estimate of 88mmbls and a higher PoS 40%. r We have been fairly conservative in our means of valuation for Tunisia. Firstly, we have only valued the 2 initial wells set to spudr this summer and not the wider prospect, in so doing ignoring a further prospective 207mmbls. Second, while we have used ther appropriate PoS ratios (34% & 40%) we have ascribed a low value per barrel of £3.4 (a low NPV per barrel) to arrive at our in‐situr valuation of £28.2m net to IRG or 61.5p per share (£148.6m in total for the two prospects). To provide an indication of potentialr upside (as discreet to valuation which must always be appropriately risk weighted) on and un‐risked basis the same methodologyr would suggest £72.8m of value net to IRG or c.160p per sharer r Rivara Gas Storage – very attractive r Rivara's working capacity, estimated at c.113 bcf would make it one of the largest underground gas storage facilities in Europe.r The value of gas storage assets can really be attributed to the differential between winter and summer time gas pricing i.e. ar hedge on buying gas in the summer and selling it at better pricing in the winter. Thus simplistically the summer winterr differential x the number of storage units – costs = potential value of gas stored, which can then be appropriately ascribed anr NPV valuation. In truth ultimately this is more a utility infrastructure play and we would expect a farm out down the lone for ther heavy capex phase of the project thought to be around $400m. The company has advanced its planning application to within twor stages of completion but with the 120 days timescale for the first already passed, timing for an eventual decision is reallyr anybody’s guess. r While we have focussed on the risk, it is also appropriate to mention political will behind the project. With Italy, heavily importr dependent for its gas (with Algeria and Russia supplying around 33% combined) prone to blackouts and security of supply is a keyr issue. A recent letter from Prime Minister Berlusconi specifically outlined the strategic importance of the Rivara storage project.r With €300‐400m value the gas storage assets are potentially the most valuable of the company’s three main assets, but ofr course are largely worthless without permitting. Thus we have taken a cautious view, discounting the value implied by the ERGr deal by a massive 85% to account for the regulatory risk. It is not difficult to envisage the much geared impact merely removingr that risk (which would immediately be warranted following approval in our view). The pre‐permitting undiscounted value perr share is around 97p and merely accounting for the pre‐planning transaction value, the true value of the project post planning isr likely to be multiple but this still looks some way off. Even following approval, there will be a two year appraisal period includingr 3D seismic acquisition.......

Score: 75.00

BUY SCIR by yankee on 22 Jul 2014 11:52

Price at rating: 0.30, now:

steelwatch 22 July'14 - 10:15 - 13 of 2503r r IRG looks about right for Italy valuations multi-bagger current price 2.55p JOKEr r ERG bids c.€63m (c.£53m)for Independent Resources (IRG)Rivara ...r SmallCap Network-19 hours agor 53m)for Independent Resources (IRG)Rivara Under Ground Gas Storage. ERG SpA, the minority shareholder of the joint venture company .r [link] r the management team at Independent Resources operates on a model that tightly integrates oil and gas exploration and storage.r IRG's model tightly integrates its upstream oil and gas assets in North Africa and Italy with the development of a major storage facility and sees this as a way to maximize its production projects as the basis of a business that returns a high value. Independent Resources has confidence that it's unique brand of partnerships and acquisitions, when tied to its assets result in a strong business model.r r At the moment, IRG is involved in many major projects including the Rivara underground gas storage facility. This project, which uses a naturally fractured deep reservoir in Italy's Po Valley, not only has gained government concessions, believes that this project will be a major step in alleviating a major hole in the gas distribution and storage system that has existed for some time.r This storage facility, when it is online will handle an estimated 3.2 billion cubic meters of natural gas. This, the company notes, would make it one of the largest storage facilities in both Italy and Europe. The key to profitability here would be building a long-term partnership on the project. The company believes the first stage of this will be online in about five years. At the moment, Independent Resources is partnering with ERG Rivara Storage srl, a subsidiary of ERG SpA, a leading Italian energy business.r Another business IRG is investigating is creating "shale gas". "Shale gas", an exploding trend in the United States, can be contained in not only coal beds but also in sedimentary rock, called carbonaceous shales, where the gas collects in micro-structures and fractures, is relatively easy to extract and can be extracted horizontally or vertically.r Independent Resources are involved in another, more limited coal bed methane from the Fiume Bruna parcel in Tuscany. It is quite an extensive project and is expected to extend south into their Casoni lease. It is a large reservoir and is also based on earlier mining efforts in the region which have substantial upgraded the reservoir's size.r In an effort to inject some environmental consciousness into this project, Independent Resources believes it will be able to inject CO2 into a coal bed to recover gas that would remain otherwise trapped. IRG believes there are many opportunities for this to be used to help cut the amount CO2 in the air.r As an oil developer, IRG holds an 18.97% percent interest in the Ksar Hadada block in Southeast Tunisia and it believes that recent discoveries of light oil in various structures will prove profitable from its Acacus well field in this area. IRG believes there is substantial profit from possible shale oil deposits in this area as there is believed to be significant "shale oil" (oil trapped in layers of shale) that may also be brought online.r Independent Resources is an oil and gas exploration company with a focus on CBM and gasr storage opportunities in Italy and a share of oil exploration activities is Tunisia. The companyr should be considered a good strategic investment. Italy is in gas deficit, Independent has gasr and, perhaps more notably, is seeking to develop strategically important storage facilitatesr that will help temper future gas shortages and ease security of supply. The valuation looksr underwritten by CBM assets with further upside in the form of very near term Tunisianr exploration and potentially, game changing upside if it is able to finally secure permitting forr its proposed Rivara gas storage operation. r r Better Politics Could Lead Italy Towards a Technologically Advanced Energy Marketr Italian Prime Minister Letta took an open-minded approach towards new energy resources, including shale gas, and we hope to see improvements on the technical investigation front in the coming months too. r r Do you know of any shale gas projects in Italy?r r The Independent Resources PLC project in Tuscany should be the only unconventional gas extraction project under way to date. It is believed that, besides Central Italy, there may be resources in the North (the Po Valley) and probably in other areas. However, deeper investigation is needed through specific studies. Regarding the first experiments carried out in Tuscany, the press has mentioned that Independent Resources PLC uses a “hydraulic fracture operation coupled with a ceramic proppant.r r What is the regulatory framework for shale gas operators in Italy? Are there any specific laws applicable only to shale gas operators (and not to companies involved exclusively in conventional gas activities)?r r There are no specific regulations concerning shale gas in Italy. r r ¾ CBM news: Recent news on the CBM front has been extremely positive. Not only did thisr confirm very gassy coal but also suggests shale gas potential and the ability to frac bothr zones enhancing their potential commerciality. In addition new licence applications couldr double the size of resource from around 92bcf currently. A minor negative is that ther additional zone will necessitate a new work programme and move back production but thisr is largely positive as such a programme will aim to enhance the production rate andr therefore value of the resource.r ¾ Free carry on Tunisian exploration: IRG has an 18.97% interest in the Petroceltic‐operatedr Ksar Hadada permit, onshore Southeast Tunisia. The Ksar conventional oil targets haver prospective* resources of 320mmbls, with a risk weighted potential of 43.7m for the firstr two wells (see section following). Seismic data completed in January identified a number ofr prospects and 2 (potentially 3) exploration wells are planned for this year, the first of whichr is due to spud in June/July this year with a second to follow immediately after.r Independent is fully carried through the 2010 work programme.r ¾ Storage, the long and winding road: Permitting in Italy is well known to be extremelyr protracted. When it involves a unique gas storage installation in Italy’s industrial heartland,r as in the case of the Rivara Under Ground Gas Storage, there are even more boxes to ber ticked. The prize though is substantial; the company estimates the post planning prospectr to be worth €300‐400m. The pre‐planning involvement of Italian national distributor ERGr greatly enhances the potential and provides a benchmark for valuation of c.€63m (c.£53m)r ‐ extrapolating the implied value of the €9.5m paid for its 15% stake.r ¾ Supportive management: Exec Chairman Grayson Nash holds c.15% of the company and,r as in past rounds, has supported the placing purchasing 200k shares.r ¾ Valuation: For now we value the company predominantly on the CBM and a typicallyr risked valuation for Tunisian exploration. We include very little value for the gas storager which offers considerable ‘post‐planning’ upside. Our price target of 143p thus equates to;r 66.7p CBM; 61.5p Tunisia exploration; 14.6p gas storager r Valuation overviewr Category £m Value Value P/pshr Tuscany CBM 30.5 66.7r Rivara Gas Storage 6.7 14.6r Tunisia Exploration 28.2 61.6r r Totals/Price target 65.4 143.0r Potential Share price Catalysts r Independent has potential for newsflow in relation to each of its 3 arms;r • Exploration, Tunisia: News on advancement and results of exploration in Tunisia, first up Oryxr • CBM, Tuscany: Advancement of work programme potential farm‐out of CBM assetsr • Gas Storage, Rivara: Granting of licences for gas storage in Rivara would have a material impact on valuation in our viewr CBM – Medium term, with excellent well recent results r IRG’s CBM acreage is located in Tuscany. Independent was awarded the Casoni exploration licence adjacent to the south ofr Fiume Bruna with the environmental impact study for the Casoni licence currently under review. Fiume Bruna has a prospectiver resource of 92 bcf. Independent has recently conducted hydraulic fracturing on the Fiume Bruna 2 well which yielded veryr positive results, suggesting a greater resource and an additional shale play.r The work programme is aimed at proving the commercial prospect for Fiume Bruna this year and recent fraccing results suggestr greater potential than originally envisaged. We have ascribed 66.7p of value of for the CBM assets, which accounts only for ther licenced acreage. We ascribe 83p per mcf of value for the assets and apply a 50% risk discount which also incorporates somer dilution for farm out (which now seems likely).r Tunisia Exploration – near term, with significant high risk exploration upside potentialr The Tunisian prospects are attractive late stage exportation opportunities with relatively high possibility of success (PoS) ofr >30%, which though still high risk is relatively attractive in terms of exploration. Two prospects are to be drilled this summer. Ther first prospect is Oryx (well scheduled to spud immanently). Oryx has P50 gross prospective recoverable resource estimate ofr 25mmbls and an ascribed possibility of success at 34%. Drilling the second and larger Sidi Toui prospect is expected to followr immediately. Sidi Toui has a P50 gross prospective recoverable resource estimate of 88mmbls and a higher PoS 40%. r We have been fairly conservative in our means of valuation for Tunisia. Firstly, we have only valued the 2 initial wells set to spudr this summer and not the wider prospect, in so doing ignoring a further prospective 207mmbls. Second, while we have used ther appropriate PoS ratios (34% & 40%) we have ascribed a low value per barrel of £3.4 (a low NPV per barrel) to arrive at our in‐situr valuation of £28.2m net to IRG or 61.5p per share (£148.6m in total for the two prospects). To provide an indication of potentialr upside (as discreet to valuation which must always be appropriately risk weighted) on and un‐risked basis the same methodologyr would suggest £72.8m of value net to IRG or c.160p per sharer r Rivara Gas Storage – very attractive r Rivara's working capacity, estimated at c.113 bcf would make it one of the largest underground gas storage facilities in Europe.r The value of gas storage assets can really be attributed to the differential between winter and summer time gas pricing i.e. ar hedge on buying gas in the summer and selling it at better pricing in the winter. Thus simplistically the summer winterr differential x the number of storage units – costs = potential value of gas stored, which can then be appropriately ascribed anr NPV valuation. In truth ultimately this is more a utility infrastructure play and we would expect a farm out down the lone for ther heavy capex phase of the project thought to be around $400m. The company has advanced its planning application to within twor stages of completion but with the 120 days timescale for the first already passed, timing for an eventual decision is reallyr anybody’s guess. r While we have focussed on the risk, it is also appropriate to mention political will behind the project. With Italy, heavily importr dependent for its gas (with Algeria and Russia supplying around 33% combined) prone to blackouts and security of supply is a keyr issue. A recent letter from Prime Minister Berlusconi specifically outlined the strategic importance of the Rivara storage project.r With €300‐400m value the gas storage assets are potentially the most valuable of the company’s three main assets, but ofr course are largely worthless without permitting. Thus we have taken a cautious view, discounting the value implied by the ERGr deal by a massive 85% to account for the regulatory risk. It is not difficult to envisage the much geared impact merely removingr that risk (which would immediately be warranted following approval in our view). The pre‐permitting undiscounted value perr share is around 97p and merely accounting for the pre‐planning transaction value, the true value of the project post planning isr likely to be multiple but this still looks some way off. Even following approval, there will be a two year appraisal period includingr 3D seismic acquisition.....

Score: 87.50

BUY RTHM by yankee on 22 Jul 2014 11:51

Price at rating: 34.00, now:

steelwatch 22 July'14 - 10:15 - 13 of 2503r r IRG looks about right for Italy valuations multi-bagger current price 2.55p JOKEr r ERG bids c.€63m (c.£53m)for Independent Resources (IRG)Rivara ...r SmallCap Network-19 hours agor 53m)for Independent Resources (IRG)Rivara Under Ground Gas Storage. ERG SpA, the minority shareholder of the joint venture company .r [link] r the management team at Independent Resources operates on a model that tightly integrates oil and gas exploration and storage.r IRG's model tightly integrates its upstream oil and gas assets in North Africa and Italy with the development of a major storage facility and sees this as a way to maximize its production projects as the basis of a business that returns a high value. Independent Resources has confidence that it's unique brand of partnerships and acquisitions, when tied to its assets result in a strong business model.r r At the moment, IRG is involved in many major projects including the Rivara underground gas storage facility. This project, which uses a naturally fractured deep reservoir in Italy's Po Valley, not only has gained government concessions, believes that this project will be a major step in alleviating a major hole in the gas distribution and storage system that has existed for some time.r This storage facility, when it is online will handle an estimated 3.2 billion cubic meters of natural gas. This, the company notes, would make it one of the largest storage facilities in both Italy and Europe. The key to profitability here would be building a long-term partnership on the project. The company believes the first stage of this will be online in about five years. At the moment, Independent Resources is partnering with ERG Rivara Storage srl, a subsidiary of ERG SpA, a leading Italian energy business.r Another business IRG is investigating is creating "shale gas". "Shale gas", an exploding trend in the United States, can be contained in not only coal beds but also in sedimentary rock, called carbonaceous shales, where the gas collects in micro-structures and fractures, is relatively easy to extract and can be extracted horizontally or vertically.r Independent Resources are involved in another, more limited coal bed methane from the Fiume Bruna parcel in Tuscany. It is quite an extensive project and is expected to extend south into their Casoni lease. It is a large reservoir and is also based on earlier mining efforts in the region which have substantial upgraded the reservoir's size.r In an effort to inject some environmental consciousness into this project, Independent Resources believes it will be able to inject CO2 into a coal bed to recover gas that would remain otherwise trapped. IRG believes there are many opportunities for this to be used to help cut the amount CO2 in the air.r As an oil developer, IRG holds an 18.97% percent interest in the Ksar Hadada block in Southeast Tunisia and it believes that recent discoveries of light oil in various structures will prove profitable from its Acacus well field in this area. IRG believes there is substantial profit from possible shale oil deposits in this area as there is believed to be significant "shale oil" (oil trapped in layers of shale) that may also be brought online.r Independent Resources is an oil and gas exploration company with a focus on CBM and gasr storage opportunities in Italy and a share of oil exploration activities is Tunisia. The companyr should be considered a good strategic investment. Italy is in gas deficit, Independent has gasr and, perhaps more notably, is seeking to develop strategically important storage facilitatesr that will help temper future gas shortages and ease security of supply. The valuation looksr underwritten by CBM assets with further upside in the form of very near term Tunisianr exploration and potentially, game changing upside if it is able to finally secure permitting forr its proposed Rivara gas storage operation. r r Better Politics Could Lead Italy Towards a Technologically Advanced Energy Marketr Italian Prime Minister Letta took an open-minded approach towards new energy resources, including shale gas, and we hope to see improvements on the technical investigation front in the coming months too. r r Do you know of any shale gas projects in Italy?r r The Independent Resources PLC project in Tuscany should be the only unconventional gas extraction project under way to date. It is believed that, besides Central Italy, there may be resources in the North (the Po Valley) and probably in other areas. However, deeper investigation is needed through specific studies. Regarding the first experiments carried out in Tuscany, the press has mentioned that Independent Resources PLC uses a “hydraulic fracture operation coupled with a ceramic proppant.r r What is the regulatory framework for shale gas operators in Italy? Are there any specific laws applicable only to shale gas operators (and not to companies involved exclusively in conventional gas activities)?r r There are no specific regulations concerning shale gas in Italy. r r ¾ CBM news: Recent news on the CBM front has been extremely positive. Not only did thisr confirm very gassy coal but also suggests shale gas potential and the ability to frac bothr zones enhancing their potential commerciality. In addition new licence applications couldr double the size of resource from around 92bcf currently. A minor negative is that ther additional zone will necessitate a new work programme and move back production but thisr is largely positive as such a programme will aim to enhance the production rate andr therefore value of the resource.r ¾ Free carry on Tunisian exploration: IRG has an 18.97% interest in the Petroceltic‐operatedr Ksar Hadada permit, onshore Southeast Tunisia. The Ksar conventional oil targets haver prospective* resources of 320mmbls, with a risk weighted potential of 43.7m for the firstr two wells (see section following). Seismic data completed in January identified a number ofr prospects and 2 (potentially 3) exploration wells are planned for this year, the first of whichr is due to spud in June/July this year with a second to follow immediately after.r Independent is fully carried through the 2010 work programme.r ¾ Storage, the long and winding road: Permitting in Italy is well known to be extremelyr protracted. When it involves a unique gas storage installation in Italy’s industrial heartland,r as in the case of the Rivara Under Ground Gas Storage, there are even more boxes to ber ticked. The prize though is substantial; the company estimates the post planning prospectr to be worth €300‐400m. The pre‐planning involvement of Italian national distributor ERGr greatly enhances the potential and provides a benchmark for valuation of c.€63m (c.£53m)r ‐ extrapolating the implied value of the €9.5m paid for its 15% stake.r ¾ Supportive management: Exec Chairman Grayson Nash holds c.15% of the company and,r as in past rounds, has supported the placing purchasing 200k shares.r ¾ Valuation: For now we value the company predominantly on the CBM and a typicallyr risked valuation for Tunisian exploration. We include very little value for the gas storager which offers considerable ‘post‐planning’ upside. Our price target of 143p thus equates to;r 66.7p CBM; 61.5p Tunisia exploration; 14.6p gas storager r Valuation overviewr Category £m Value Value P/pshr Tuscany CBM 30.5 66.7r Rivara Gas Storage 6.7 14.6r Tunisia Exploration 28.2 61.6r r Totals/Price target 65.4 143.0r Potential Share price Catalysts r Independent has potential for newsflow in relation to each of its 3 arms;r • Exploration, Tunisia: News on advancement and results of exploration in Tunisia, first up Oryxr • CBM, Tuscany: Advancement of work programme potential farm‐out of CBM assetsr • Gas Storage, Rivara: Granting of licences for gas storage in Rivara would have a material impact on valuation in our viewr CBM – Medium term, with excellent well recent results r IRG’s CBM acreage is located in Tuscany. Independent was awarded the Casoni exploration licence adjacent to the south ofr Fiume Bruna with the environmental impact study for the Casoni licence currently under review. Fiume Bruna has a prospectiver resource of 92 bcf. Independent has recently conducted hydraulic fracturing on the Fiume Bruna 2 well which yielded veryr positive results, suggesting a greater resource and an additional shale play.r The work programme is aimed at proving the commercial prospect for Fiume Bruna this year and recent fraccing results suggestr greater potential than originally envisaged. We have ascribed 66.7p of value of for the CBM assets, which accounts only for ther licenced acreage. We ascribe 83p per mcf of value for the assets and apply a 50% risk discount which also incorporates somer dilution for farm out (which now seems likely).r Tunisia Exploration – near term, with significant high risk exploration upside potentialr The Tunisian prospects are attractive late stage exportation opportunities with relatively high possibility of success (PoS) ofr >30%, which though still high risk is relatively attractive in terms of exploration. Two prospects are to be drilled this summer. Ther first prospect is Oryx (well scheduled to spud immanently). Oryx has P50 gross prospective recoverable resource estimate ofr 25mmbls and an ascribed possibility of success at 34%. Drilling the second and larger Sidi Toui prospect is expected to followr immediately. Sidi Toui has a P50 gross prospective recoverable resource estimate of 88mmbls and a higher PoS 40%. r We have been fairly conservative in our means of valuation for Tunisia. Firstly, we have only valued the 2 initial wells set to spudr this summer and not the wider prospect, in so doing ignoring a further prospective 207mmbls. Second, while we have used ther appropriate PoS ratios (34% & 40%) we have ascribed a low value per barrel of £3.4 (a low NPV per barrel) to arrive at our in‐situr valuation of £28.2m net to IRG or 61.5p per share (£148.6m in total for the two prospects). To provide an indication of potentialr upside (as discreet to valuation which must always be appropriately risk weighted) on and un‐risked basis the same methodologyr would suggest £72.8m of value net to IRG or c.160p per sharer r Rivara Gas Storage – very attractive r Rivara's working capacity, estimated at c.113 bcf would make it one of the largest underground gas storage facilities in Europe.r The value of gas storage assets can really be attributed to the differential between winter and summer time gas pricing i.e. ar hedge on buying gas in the summer and selling it at better pricing in the winter. Thus simplistically the summer winterr differential x the number of storage units – costs = potential value of gas stored, which can then be appropriately ascribed anr NPV valuation. In truth ultimately this is more a utility infrastructure play and we would expect a farm out down the lone for ther heavy capex phase of the project thought to be around $400m. The company has advanced its planning application to within twor stages of completion but with the 120 days timescale for the first already passed, timing for an eventual decision is reallyr anybody’s guess. r While we have focussed on the risk, it is also appropriate to mention political will behind the project. With Italy, heavily importr dependent for its gas (with Algeria and Russia supplying around 33% combined) prone to blackouts and security of supply is a keyr issue. A recent letter from Prime Minister Berlusconi specifically outlined the strategic importance of the Rivara storage project.r With €300‐400m value the gas storage assets are potentially the most valuable of the company’s three main assets, but ofr course are largely worthless without permitting. Thus we have taken a cautious view, discounting the value implied by the ERGr deal by a massive 85% to account for the regulatory risk. It is not difficult to envisage the much geared impact merely removingr that risk (which would immediately be warranted following approval in our view). The pre‐permitting undiscounted value perr share is around 97p and merely accounting for the pre‐planning transaction value, the true value of the project post planning isr likely to be multiple but this still looks some way off. Even following approval, there will be a two year appraisal period includingr 3D seismic acquisition..

Score: 66.25

BUY KEA by yankee on 22 Jul 2014 11:51

Price at rating: 2.22, now:

steelwatch 22 July'14 - 10:15 - 13 of 2503r r IRG looks about right for Italy valuations multi-bagger current price 2.55p JOKEr r ERG bids c.€63m (c.£53m)for Independent Resources (IRG)Rivara ...r SmallCap Network-19 hours agor 53m)for Independent Resources (IRG)Rivara Under Ground Gas Storage. ERG SpA, the minority shareholder of the joint venture company .r [link] r the management team at Independent Resources operates on a model that tightly integrates oil and gas exploration and storage.r IRG's model tightly integrates its upstream oil and gas assets in North Africa and Italy with the development of a major storage facility and sees this as a way to maximize its production projects as the basis of a business that returns a high value. Independent Resources has confidence that it's unique brand of partnerships and acquisitions, when tied to its assets result in a strong business model.r r At the moment, IRG is involved in many major projects including the Rivara underground gas storage facility. This project, which uses a naturally fractured deep reservoir in Italy's Po Valley, not only has gained government concessions, believes that this project will be a major step in alleviating a major hole in the gas distribution and storage system that has existed for some time.r This storage facility, when it is online will handle an estimated 3.2 billion cubic meters of natural gas. This, the company notes, would make it one of the largest storage facilities in both Italy and Europe. The key to profitability here would be building a long-term partnership on the project. The company believes the first stage of this will be online in about five years. At the moment, Independent Resources is partnering with ERG Rivara Storage srl, a subsidiary of ERG SpA, a leading Italian energy business.r Another business IRG is investigating is creating "shale gas". "Shale gas", an exploding trend in the United States, can be contained in not only coal beds but also in sedimentary rock, called carbonaceous shales, where the gas collects in micro-structures and fractures, is relatively easy to extract and can be extracted horizontally or vertically.r Independent Resources are involved in another, more limited coal bed methane from the Fiume Bruna parcel in Tuscany. It is quite an extensive project and is expected to extend south into their Casoni lease. It is a large reservoir and is also based on earlier mining efforts in the region which have substantial upgraded the reservoir's size.r In an effort to inject some environmental consciousness into this project, Independent Resources believes it will be able to inject CO2 into a coal bed to recover gas that would remain otherwise trapped. IRG believes there are many opportunities for this to be used to help cut the amount CO2 in the air.r As an oil developer, IRG holds an 18.97% percent interest in the Ksar Hadada block in Southeast Tunisia and it believes that recent discoveries of light oil in various structures will prove profitable from its Acacus well field in this area. IRG believes there is substantial profit from possible shale oil deposits in this area as there is believed to be significant "shale oil" (oil trapped in layers of shale) that may also be brought online.r Independent Resources is an oil and gas exploration company with a focus on CBM and gasr storage opportunities in Italy and a share of oil exploration activities is Tunisia. The companyr should be considered a good strategic investment. Italy is in gas deficit, Independent has gasr and, perhaps more notably, is seeking to develop strategically important storage facilitatesr that will help temper future gas shortages and ease security of supply. The valuation looksr underwritten by CBM assets with further upside in the form of very near term Tunisianr exploration and potentially, game changing upside if it is able to finally secure permitting forr its proposed Rivara gas storage operation. r r Better Politics Could Lead Italy Towards a Technologically Advanced Energy Marketr Italian Prime Minister Letta took an open-minded approach towards new energy resources, including shale gas, and we hope to see improvements on the technical investigation front in the coming months too. r r Do you know of any shale gas projects in Italy?r r The Independent Resources PLC project in Tuscany should be the only unconventional gas extraction project under way to date. It is believed that, besides Central Italy, there may be resources in the North (the Po Valley) and probably in other areas. However, deeper investigation is needed through specific studies. Regarding the first experiments carried out in Tuscany, the press has mentioned that Independent Resources PLC uses a “hydraulic fracture operation coupled with a ceramic proppant.r r What is the regulatory framework for shale gas operators in Italy? Are there any specific laws applicable only to shale gas operators (and not to companies involved exclusively in conventional gas activities)?r r There are no specific regulations concerning shale gas in Italy. r r ¾ CBM news: Recent news on the CBM front has been extremely positive. Not only did thisr confirm very gassy coal but also suggests shale gas potential and the ability to frac bothr zones enhancing their potential commerciality. In addition new licence applications couldr double the size of resource from around 92bcf currently. A minor negative is that ther additional zone will necessitate a new work programme and move back production but thisr is largely positive as such a programme will aim to enhance the production rate andr therefore value of the resource.r ¾ Free carry on Tunisian exploration: IRG has an 18.97% interest in the Petroceltic‐operatedr Ksar Hadada permit, onshore Southeast Tunisia. The Ksar conventional oil targets haver prospective* resources of 320mmbls, with a risk weighted potential of 43.7m for the firstr two wells (see section following). Seismic data completed in January identified a number ofr prospects and 2 (potentially 3) exploration wells are planned for this year, the first of whichr is due to spud in June/July this year with a second to follow immediately after.r Independent is fully carried through the 2010 work programme.r ¾ Storage, the long and winding road: Permitting in Italy is well known to be extremelyr protracted. When it involves a unique gas storage installation in Italy’s industrial heartland,r as in the case of the Rivara Under Ground Gas Storage, there are even more boxes to ber ticked. The prize though is substantial; the company estimates the post planning prospectr to be worth €300‐400m. The pre‐planning involvement of Italian national distributor ERGr greatly enhances the potential and provides a benchmark for valuation of c.€63m (c.£53m)r ‐ extrapolating the implied value of the €9.5m paid for its 15% stake.r ¾ Supportive management: Exec Chairman Grayson Nash holds c.15% of the company and,r as in past rounds, has supported the placing purchasing 200k shares.r ¾ Valuation: For now we value the company predominantly on the CBM and a typicallyr risked valuation for Tunisian exploration. We include very little value for the gas storager which offers considerable ‘post‐planning’ upside. Our price target of 143p thus equates to;r 66.7p CBM; 61.5p Tunisia exploration; 14.6p gas storager r Valuation overviewr Category £m Value Value P/pshr Tuscany CBM 30.5 66.7r Rivara Gas Storage 6.7 14.6r Tunisia Exploration 28.2 61.6r r Totals/Price target 65.4 143.0r Potential Share price Catalysts r Independent has potential for newsflow in relation to each of its 3 arms;r • Exploration, Tunisia: News on advancement and results of exploration in Tunisia, first up Oryxr • CBM, Tuscany: Advancement of work programme potential farm‐out of CBM assetsr • Gas Storage, Rivara: Granting of licences for gas storage in Rivara would have a material impact on valuation in our viewr CBM – Medium term, with excellent well recent results r IRG’s CBM acreage is located in Tuscany. Independent was awarded the Casoni exploration licence adjacent to the south ofr Fiume Bruna with the environmental impact study for the Casoni licence currently under review. Fiume Bruna has a prospectiver resource of 92 bcf. Independent has recently conducted hydraulic fracturing on the Fiume Bruna 2 well which yielded veryr positive results, suggesting a greater resource and an additional shale play.r The work programme is aimed at proving the commercial prospect for Fiume Bruna this year and recent fraccing results suggestr greater potential than originally envisaged. We have ascribed 66.7p of value of for the CBM assets, which accounts only for ther licenced acreage. We ascribe 83p per mcf of value for the assets and apply a 50% risk discount which also incorporates somer dilution for farm out (which now seems likely).r Tunisia Exploration – near term, with significant high risk exploration upside potentialr The Tunisian prospects are attractive late stage exportation opportunities with relatively high possibility of success (PoS) ofr >30%, which though still high risk is relatively attractive in terms of exploration. Two prospects are to be drilled this summer. Ther first prospect is Oryx (well scheduled to spud immanently). Oryx has P50 gross prospective recoverable resource estimate ofr 25mmbls and an ascribed possibility of success at 34%. Drilling the second and larger Sidi Toui prospect is expected to followr immediately. Sidi Toui has a P50 gross prospective recoverable resource estimate of 88mmbls and a higher PoS 40%. r We have been fairly conservative in our means of valuation for Tunisia. Firstly, we have only valued the 2 initial wells set to spudr this summer and not the wider prospect, in so doing ignoring a further prospective 207mmbls. Second, while we have used ther appropriate PoS ratios (34% & 40%) we have ascribed a low value per barrel of £3.4 (a low NPV per barrel) to arrive at our in‐situr valuation of £28.2m net to IRG or 61.5p per share (£148.6m in total for the two prospects). To provide an indication of potentialr upside (as discreet to valuation which must always be appropriately risk weighted) on and un‐risked basis the same methodologyr would suggest £72.8m of value net to IRG or c.160p per sharer r Rivara Gas Storage – very attractive r Rivara's working capacity, estimated at c.113 bcf would make it one of the largest underground gas storage facilities in Europe.r The value of gas storage assets can really be attributed to the differential between winter and summer time gas pricing i.e. ar hedge on buying gas in the summer and selling it at better pricing in the winter. Thus simplistically the summer winterr differential x the number of storage units – costs = potential value of gas stored, which can then be appropriately ascribed anr NPV valuation. In truth ultimately this is more a utility infrastructure play and we would expect a farm out down the lone for ther heavy capex phase of the project thought to be around $400m. The company has advanced its planning application to within twor stages of completion but with the 120 days timescale for the first already passed, timing for an eventual decision is reallyr anybody’s guess. r While we have focussed on the risk, it is also appropriate to mention political will behind the project. With Italy, heavily importr dependent for its gas (with Algeria and Russia supplying around 33% combined) prone to blackouts and security of supply is a keyr issue. A recent letter from Prime Minister Berlusconi specifically outlined the strategic importance of the Rivara storage project.r With €300‐400m value the gas storage assets are potentially the most valuable of the company’s three main assets, but ofr course are largely worthless without permitting. Thus we have taken a cautious view, discounting the value implied by the ERGr deal by a massive 85% to account for the regulatory risk. It is not difficult to envisage the much geared impact merely removingr that risk (which would immediately be warranted following approval in our view). The pre‐permitting undiscounted value perr share is around 97p and merely accounting for the pre‐planning transaction value, the true value of the project post planning isr likely to be multiple but this still looks some way off. Even following approval, there will be a two year appraisal period includingr 3D seismic acquisition.

Score: 93.75

BUY POG by yankee on 22 Jul 2014 11:36

Price at rating: 36.70, now:

steelwatch 22 July'14 - 10:15 - 13 of 2503r r IRG looks about right for Italy valuations multi-bagger current price 2.55p JOKEr r ERG bids c.€63m (c.£53m)for Independent Resources (IRG)Rivara ...r SmallCap Network-19 hours agor 53m)for Independent Resources (IRG)Rivara Under Ground Gas Storage. ERG SpA, the minority shareholder of the joint venture company .r [link] r the management team at Independent Resources operates on a model that tightly integrates oil and gas exploration and storage.r IRG's model tightly integrates its upstream oil and gas assets in North Africa and Italy with the development of a major storage facility and sees this as a way to maximize its production projects as the basis of a business that returns a high value. Independent Resources has confidence that it's unique brand of partnerships and acquisitions, when tied to its assets result in a strong business model.r r At the moment, IRG is involved in many major projects including the Rivara underground gas storage facility. This project, which uses a naturally fractured deep reservoir in Italy's Po Valley, not only has gained government concessions, believes that this project will be a major step in alleviating a major hole in the gas distribution and storage system that has existed for some time.r This storage facility, when it is online will handle an estimated 3.2 billion cubic meters of natural gas. This, the company notes, would make it one of the largest storage facilities in both Italy and Europe. The key to profitability here would be building a long-term partnership on the project. The company believes the first stage of this will be online in about five years. At the moment, Independent Resources is partnering with ERG Rivara Storage srl, a subsidiary of ERG SpA, a leading Italian energy business.r Another business IRG is investigating is creating "shale gas". "Shale gas", an exploding trend in the United States, can be contained in not only coal beds but also in sedimentary rock, called carbonaceous shales, where the gas collects in micro-structures and fractures, is relatively easy to extract and can be extracted horizontally or vertically.r Independent Resources are involved in another, more limited coal bed methane from the Fiume Bruna parcel in Tuscany. It is quite an extensive project and is expected to extend south into their Casoni lease. It is a large reservoir and is also based on earlier mining efforts in the region which have substantial upgraded the reservoir's size.r In an effort to inject some environmental consciousness into this project, Independent Resources believes it will be able to inject CO2 into a coal bed to recover gas that would remain otherwise trapped. IRG believes there are many opportunities for this to be used to help cut the amount CO2 in the air.r As an oil developer, IRG holds an 18.97% percent interest in the Ksar Hadada block in Southeast Tunisia and it believes that recent discoveries of light oil in various structures will prove profitable from its Acacus well field in this area. IRG believes there is substantial profit from possible shale oil deposits in this area as there is believed to be significant "shale oil" (oil trapped in layers of shale) that may also be brought online.r Independent Resources is an oil and gas exploration company with a focus on CBM and gasr storage opportunities in Italy and a share of oil exploration activities is Tunisia. The companyr should be considered a good strategic investment. Italy is in gas deficit, Independent has gasr and, perhaps more notably, is seeking to develop strategically important storage facilitatesr that will help temper future gas shortages and ease security of supply. The valuation looksr underwritten by CBM assets with further upside in the form of very near term Tunisianr exploration and potentially, game changing upside if it is able to finally secure permitting forr its proposed Rivara gas storage operation. r r Better Politics Could Lead Italy Towards a Technologically Advanced Energy Marketr Italian Prime Minister Letta took an open-minded approach towards new energy resources, including shale gas, and we hope to see improvements on the technical investigation front in the coming months too. r r Do you know of any shale gas projects in Italy?r r The Independent Resources PLC project in Tuscany should be the only unconventional gas extraction project under way to date. It is believed that, besides Central Italy, there may be resources in the North (the Po Valley) and probably in other areas. However, deeper investigation is needed through specific studies. Regarding the first experiments carried out in Tuscany, the press has mentioned that Independent Resources PLC uses a “hydraulic fracture operation coupled with a ceramic proppant.r r What is the regulatory framework for shale gas operators in Italy? Are there any specific laws applicable only to shale gas operators (and not to companies involved exclusively in conventional gas activities)?r r There are no specific regulations concerning shale gas in Italy. r r ¾ CBM news: Recent news on the CBM front has been extremely positive. Not only did thisr confirm very gassy coal but also suggests shale gas potential and the ability to frac bothr zones enhancing their potential commerciality. In addition new licence applications couldr double the size of resource from around 92bcf currently. A minor negative is that ther additional zone will necessitate a new work programme and move back production but thisr is largely positive as such a programme will aim to enhance the production rate andr therefore value of the resource.r ¾ Free carry on Tunisian exploration: IRG has an 18.97% interest in the Petroceltic‐operatedr Ksar Hadada permit, onshore Southeast Tunisia. The Ksar conventional oil targets haver prospective* resources of 320mmbls, with a risk weighted potential of 43.7m for the firstr two wells (see section following). Seismic data completed in January identified a number ofr prospects and 2 (potentially 3) exploration wells are planned for this year, the first of whichr is due to spud in June/July this year with a second to follow immediately after.r Independent is fully carried through the 2010 work programme.r ¾ Storage, the long and winding road: Permitting in Italy is well known to be extremelyr protracted. When it involves a unique gas storage installation in Italy’s industrial heartland,r as in the case of the Rivara Under Ground Gas Storage, there are even more boxes to ber ticked. The prize though is substantial; the company estimates the post planning prospectr to be worth €300‐400m. The pre‐planning involvement of Italian national distributor ERGr greatly enhances the potential and provides a benchmark for valuation of c.€63m (c.£53m)r ‐ extrapolating the implied value of the €9.5m paid for its 15% stake.r ¾ Supportive management: Exec Chairman Grayson Nash holds c.15% of the company and,r as in past rounds, has supported the placing purchasing 200k shares.r ¾ Valuation: For now we value the company predominantly on the CBM and a typicallyr risked valuation for Tunisian exploration. We include very little value for the gas storager which offers considerable ‘post‐planning’ upside. Our price target of 143p thus equates to;r 66.7p CBM; 61.5p Tunisia exploration; 14.6p gas storager r Valuation overviewr Category £m Value Value P/pshr Tuscany CBM 30.5 66.7r Rivara Gas Storage 6.7 14.6r Tunisia Exploration 28.2 61.6r r Totals/Price target 65.4 143.0r Potential Share price Catalysts r Independent has potential for newsflow in relation to each of its 3 arms;r • Exploration, Tunisia: News on advancement and results of exploration in Tunisia, first up Oryxr • CBM, Tuscany: Advancement of work programme potential farm‐out of CBM assetsr • Gas Storage, Rivara: Granting of licences for gas storage in Rivara would have a material impact on valuation in our viewr CBM – Medium term, with excellent well recent results r IRG’s CBM acreage is located in Tuscany. Independent was awarded the Casoni exploration licence adjacent to the south ofr Fiume Bruna with the environmental impact study for the Casoni licence currently under review. Fiume Bruna has a prospectiver resource of 92 bcf. Independent has recently conducted hydraulic fracturing on the Fiume Bruna 2 well which yielded veryr positive results, suggesting a greater resource and an additional shale play.r The work programme is aimed at proving the commercial prospect for Fiume Bruna this year and recent fraccing results suggestr greater potential than originally envisaged. We have ascribed 66.7p of value of for the CBM assets, which accounts only for ther licenced acreage. We ascribe 83p per mcf of value for the assets and apply a 50% risk discount which also incorporates somer dilution for farm out (which now seems likely).r Tunisia Exploration – near term, with significant high risk exploration upside potentialr The Tunisian prospects are attractive late stage exportation opportunities with relatively high possibility of success (PoS) ofr >30%, which though still high risk is relatively attractive in terms of exploration. Two prospects are to be drilled this summer. Ther first prospect is Oryx (well scheduled to spud immanently). Oryx has P50 gross prospective recoverable resource estimate ofr 25mmbls and an ascribed possibility of success at 34%. Drilling the second and larger Sidi Toui prospect is expected to followr immediately. Sidi Toui has a P50 gross prospective recoverable resource estimate of 88mmbls and a higher PoS 40%. r We have been fairly conservative in our means of valuation for Tunisia. Firstly, we have only valued the 2 initial wells set to spudr this summer and not the wider prospect, in so doing ignoring a further prospective 207mmbls. Second, while we have used ther appropriate PoS ratios (34% & 40%) we have ascribed a low value per barrel of £3.4 (a low NPV per barrel) to arrive at our in‐situr valuation of £28.2m net to IRG or 61.5p per share (£148.6m in total for the two prospects). To provide an indication of potentialr upside (as discreet to valuation which must always be appropriately risk weighted) on and un‐risked basis the same methodologyr would suggest £72.8m of value net to IRG or c.160p per sharer r Rivara Gas Storage – very attractive r Rivara's working capacity, estimated at c.113 bcf would make it one of the largest underground gas storage facilities in Europe.r The value of gas storage assets can really be attributed to the differential between winter and summer time gas pricing i.e. ar hedge on buying gas in the summer and selling it at better pricing in the winter. Thus simplistically the summer winterr differential x the number of storage units – costs = potential value of gas stored, which can then be appropriately ascribed anr NPV valuation. In truth ultimately this is more a utility infrastructure play and we would expect a farm out down the lone for ther heavy capex phase of the project thought to be around $400m. The company has advanced its planning application to within twor stages of completion but with the 120 days timescale for the first already passed, timing for an eventual decision is reallyr anybody’s guess. r While we have focussed on the risk, it is also appropriate to mention political will behind the project. With Italy, heavily importr dependent for its gas (with Algeria and Russia supplying around 33% combined) prone to blackouts and security of supply is a keyr issue. A recent letter from Prime Minister Berlusconi specifically outlined the strategic importance of the Rivara storage project.r With €300‐400m value the gas storage assets are potentially the most valuable of the company’s three main assets, but ofr course are largely worthless without permitting. Thus we have taken a cautious view, discounting the value implied by the ERGr deal by a massive 85% to account for the regulatory risk. It is not difficult to envisage the much geared impact merely removingr that risk (which would immediately be warranted following approval in our view). The pre‐permitting undiscounted value perr share is around 97p and merely accounting for the pre‐planning transaction value, the true value of the project post planning isr likely to be multiple but this still looks some way off. Even following approval, there will be a two year appraisal period includingr 3D seismic acquisition...

Score: 31.25

BUY CHAR by yankee on 22 Jul 2014 11:36

Price at rating: 15.75, now:

steelwatch 22 July'14 - 10:15 - 13 of 2503r r IRG looks about right for Italy valuations multi-bagger current price 2.55p JOKEr r ERG bids c.€63m (c.£53m)for Independent Resources (IRG)Rivara ...r SmallCap Network-19 hours agor 53m)for Independent Resources (IRG)Rivara Under Ground Gas Storage. ERG SpA, the minority shareholder of the joint venture company .r [link] r the management team at Independent Resources operates on a model that tightly integrates oil and gas exploration and storage.r IRG's model tightly integrates its upstream oil and gas assets in North Africa and Italy with the development of a major storage facility and sees this as a way to maximize its production projects as the basis of a business that returns a high value. Independent Resources has confidence that it's unique brand of partnerships and acquisitions, when tied to its assets result in a strong business model.r r At the moment, IRG is involved in many major projects including the Rivara underground gas storage facility. This project, which uses a naturally fractured deep reservoir in Italy's Po Valley, not only has gained government concessions, believes that this project will be a major step in alleviating a major hole in the gas distribution and storage system that has existed for some time.r This storage facility, when it is online will handle an estimated 3.2 billion cubic meters of natural gas. This, the company notes, would make it one of the largest storage facilities in both Italy and Europe. The key to profitability here would be building a long-term partnership on the project. The company believes the first stage of this will be online in about five years. At the moment, Independent Resources is partnering with ERG Rivara Storage srl, a subsidiary of ERG SpA, a leading Italian energy business.r Another business IRG is investigating is creating "shale gas". "Shale gas", an exploding trend in the United States, can be contained in not only coal beds but also in sedimentary rock, called carbonaceous shales, where the gas collects in micro-structures and fractures, is relatively easy to extract and can be extracted horizontally or vertically.r Independent Resources are involved in another, more limited coal bed methane from the Fiume Bruna parcel in Tuscany. It is quite an extensive project and is expected to extend south into their Casoni lease. It is a large reservoir and is also based on earlier mining efforts in the region which have substantial upgraded the reservoir's size.r In an effort to inject some environmental consciousness into this project, Independent Resources believes it will be able to inject CO2 into a coal bed to recover gas that would remain otherwise trapped. IRG believes there are many opportunities for this to be used to help cut the amount CO2 in the air.r As an oil developer, IRG holds an 18.97% percent interest in the Ksar Hadada block in Southeast Tunisia and it believes that recent discoveries of light oil in various structures will prove profitable from its Acacus well field in this area. IRG believes there is substantial profit from possible shale oil deposits in this area as there is believed to be significant "shale oil" (oil trapped in layers of shale) that may also be brought online.r Independent Resources is an oil and gas exploration company with a focus on CBM and gasr storage opportunities in Italy and a share of oil exploration activities is Tunisia. The companyr should be considered a good strategic investment. Italy is in gas deficit, Independent has gasr and, perhaps more notably, is seeking to develop strategically important storage facilitatesr that will help temper future gas shortages and ease security of supply. The valuation looksr underwritten by CBM assets with further upside in the form of very near term Tunisianr exploration and potentially, game changing upside if it is able to finally secure permitting forr its proposed Rivara gas storage operation. r r Better Politics Could Lead Italy Towards a Technologically Advanced Energy Marketr Italian Prime Minister Letta took an open-minded approach towards new energy resources, including shale gas, and we hope to see improvements on the technical investigation front in the coming months too. r r Do you know of any shale gas projects in Italy?r r The Independent Resources PLC project in Tuscany should be the only unconventional gas extraction project under way to date. It is believed that, besides Central Italy, there may be resources in the North (the Po Valley) and probably in other areas. However, deeper investigation is needed through specific studies. Regarding the first experiments carried out in Tuscany, the press has mentioned that Independent Resources PLC uses a “hydraulic fracture operation coupled with a ceramic proppant.r r What is the regulatory framework for shale gas operators in Italy? Are there any specific laws applicable only to shale gas operators (and not to companies involved exclusively in conventional gas activities)?r r There are no specific regulations concerning shale gas in Italy. r r ¾ CBM news: Recent news on the CBM front has been extremely positive. Not only did thisr confirm very gassy coal but also suggests shale gas potential and the ability to frac bothr zones enhancing their potential commerciality. In addition new licence applications couldr double the size of resource from around 92bcf currently. A minor negative is that ther additional zone will necessitate a new work programme and move back production but thisr is largely positive as such a programme will aim to enhance the production rate andr therefore value of the resource.r ¾ Free carry on Tunisian exploration: IRG has an 18.97% interest in the Petroceltic‐operatedr Ksar Hadada permit, onshore Southeast Tunisia. The Ksar conventional oil targets haver prospective* resources of 320mmbls, with a risk weighted potential of 43.7m for the firstr two wells (see section following). Seismic data completed in January identified a number ofr prospects and 2 (potentially 3) exploration wells are planned for this year, the first of whichr is due to spud in June/July this year with a second to follow immediately after.r Independent is fully carried through the 2010 work programme.r ¾ Storage, the long and winding road: Permitting in Italy is well known to be extremelyr protracted. When it involves a unique gas storage installation in Italy’s industrial heartland,r as in the case of the Rivara Under Ground Gas Storage, there are even more boxes to ber ticked. The prize though is substantial; the company estimates the post planning prospectr to be worth €300‐400m. The pre‐planning involvement of Italian national distributor ERGr greatly enhances the potential and provides a benchmark for valuation of c.€63m (c.£53m)r ‐ extrapolating the implied value of the €9.5m paid for its 15% stake.r ¾ Supportive management: Exec Chairman Grayson Nash holds c.15% of the company and,r as in past rounds, has supported the placing purchasing 200k shares.r ¾ Valuation: For now we value the company predominantly on the CBM and a typicallyr risked valuation for Tunisian exploration. We include very little value for the gas storager which offers considerable ‘post‐planning’ upside. Our price target of 143p thus equates to;r 66.7p CBM; 61.5p Tunisia exploration; 14.6p gas storager r Valuation overviewr Category £m Value Value P/pshr Tuscany CBM 30.5 66.7r Rivara Gas Storage 6.7 14.6r Tunisia Exploration 28.2 61.6r r Totals/Price target 65.4 143.0r Potential Share price Catalysts r Independent has potential for newsflow in relation to each of its 3 arms;r • Exploration, Tunisia: News on advancement and results of exploration in Tunisia, first up Oryxr • CBM, Tuscany: Advancement of work programme potential farm‐out of CBM assetsr • Gas Storage, Rivara: Granting of licences for gas storage in Rivara would have a material impact on valuation in our viewr CBM – Medium term, with excellent well recent results r IRG’s CBM acreage is located in Tuscany. Independent was awarded the Casoni exploration licence adjacent to the south ofr Fiume Bruna with the environmental impact study for the Casoni licence currently under review. Fiume Bruna has a prospectiver resource of 92 bcf. Independent has recently conducted hydraulic fracturing on the Fiume Bruna 2 well which yielded veryr positive results, suggesting a greater resource and an additional shale play.r The work programme is aimed at proving the commercial prospect for Fiume Bruna this year and recent fraccing results suggestr greater potential than originally envisaged. We have ascribed 66.7p of value of for the CBM assets, which accounts only for ther licenced acreage. We ascribe 83p per mcf of value for the assets and apply a 50% risk discount which also incorporates somer dilution for farm out (which now seems likely).r Tunisia Exploration – near term, with significant high risk exploration upside potentialr The Tunisian prospects are attractive late stage exportation opportunities with relatively high possibility of success (PoS) ofr >30%, which though still high risk is relatively attractive in terms of exploration. Two prospects are to be drilled this summer. Ther first prospect is Oryx (well scheduled to spud immanently). Oryx has P50 gross prospective recoverable resource estimate ofr 25mmbls and an ascribed possibility of success at 34%. Drilling the second and larger Sidi Toui prospect is expected to followr immediately. Sidi Toui has a P50 gross prospective recoverable resource estimate of 88mmbls and a higher PoS 40%. r We have been fairly conservative in our means of valuation for Tunisia. Firstly, we have only valued the 2 initial wells set to spudr this summer and not the wider prospect, in so doing ignoring a further prospective 207mmbls. Second, while we have used ther appropriate PoS ratios (34% & 40%) we have ascribed a low value per barrel of £3.4 (a low NPV per barrel) to arrive at our in‐situr valuation of £28.2m net to IRG or 61.5p per share (£148.6m in total for the two prospects). To provide an indication of potentialr upside (as discreet to valuation which must always be appropriately risk weighted) on and un‐risked basis the same methodologyr would suggest £72.8m of value net to IRG or c.160p per sharer r Rivara Gas Storage – very attractive r Rivara's working capacity, estimated at c.113 bcf would make it one of the largest underground gas storage facilities in Europe.r The value of gas storage assets can really be attributed to the differential between winter and summer time gas pricing i.e. ar hedge on buying gas in the summer and selling it at better pricing in the winter. Thus simplistically the summer winterr differential x the number of storage units – costs = potential value of gas stored, which can then be appropriately ascribed anr NPV valuation. In truth ultimately this is more a utility infrastructure play and we would expect a farm out down the lone for ther heavy capex phase of the project thought to be around $400m. The company has advanced its planning application to within twor stages of completion but with the 120 days timescale for the first already passed, timing for an eventual decision is reallyr anybody’s guess. r While we have focussed on the risk, it is also appropriate to mention political will behind the project. With Italy, heavily importr dependent for its gas (with Algeria and Russia supplying around 33% combined) prone to blackouts and security of supply is a keyr issue. A recent letter from Prime Minister Berlusconi specifically outlined the strategic importance of the Rivara storage project.r With €300‐400m value the gas storage assets are potentially the most valuable of the company’s three main assets, but ofr course are largely worthless without permitting. Thus we have taken a cautious view, discounting the value implied by the ERGr deal by a massive 85% to account for the regulatory risk. It is not difficult to envisage the much geared impact merely removingr that risk (which would immediately be warranted following approval in our view). The pre‐permitting undiscounted value perr share is around 97p and merely accounting for the pre‐planning transaction value, the true value of the project post planning isr likely to be multiple but this still looks some way off. Even following approval, there will be a two year appraisal period includingr 3D seismic acquisition.

Score: 60.00

BUY OEX by yankee on 22 Jul 2014 11:19

Price at rating: 10.75, now:

steelwatch 22 July'14 - 10:15 - 13 of 2503r r IRG looks about right for Italy valuations multi-bagger current price 2.55p JOKEr r ERG bids c.€63m (c.£53m)for Independent Resources (IRG)Rivara ...r SmallCap Network-19 hours agor 53m)for Independent Resources (IRG)Rivara Under Ground Gas Storage. ERG SpA, the minority shareholder of the joint venture company .r [link] r the management team at Independent Resources operates on a model that tightly integrates oil and gas exploration and storage.r IRG's model tightly integrates its upstream oil and gas assets in North Africa and Italy with the development of a major storage facility and sees this as a way to maximize its production projects as the basis of a business that returns a high value. Independent Resources has confidence that it's unique brand of partnerships and acquisitions, when tied to its assets result in a strong business model.r r At the moment, IRG is involved in many major projects including the Rivara underground gas storage facility. This project, which uses a naturally fractured deep reservoir in Italy's Po Valley, not only has gained government concessions, believes that this project will be a major step in alleviating a major hole in the gas distribution and storage system that has existed for some time.r This storage facility, when it is online will handle an estimated 3.2 billion cubic meters of natural gas. This, the company notes, would make it one of the largest storage facilities in both Italy and Europe. The key to profitability here would be building a long-term partnership on the project. The company believes the first stage of this will be online in about five years. At the moment, Independent Resources is partnering with ERG Rivara Storage srl, a subsidiary of ERG SpA, a leading Italian energy business.r Another business IRG is investigating is creating "shale gas". "Shale gas", an exploding trend in the United States, can be contained in not only coal beds but also in sedimentary rock, called carbonaceous shales, where the gas collects in micro-structures and fractures, is relatively easy to extract and can be extracted horizontally or vertically.r Independent Resources are involved in another, more limited coal bed methane from the Fiume Bruna parcel in Tuscany. It is quite an extensive project and is expected to extend south into their Casoni lease. It is a large reservoir and is also based on earlier mining efforts in the region which have substantial upgraded the reservoir's size.r In an effort to inject some environmental consciousness into this project, Independent Resources believes it will be able to inject CO2 into a coal bed to recover gas that would remain otherwise trapped. IRG believes there are many opportunities for this to be used to help cut the amount CO2 in the air.r As an oil developer, IRG holds an 18.97% percent interest in the Ksar Hadada block in Southeast Tunisia and it believes that recent discoveries of light oil in various structures will prove profitable from its Acacus well field in this area. IRG believes there is substantial profit from possible shale oil deposits in this area as there is believed to be significant "shale oil" (oil trapped in layers of shale) that may also be brought online.r Independent Resources is an oil and gas exploration company with a focus on CBM and gasr storage opportunities in Italy and a share of oil exploration activities is Tunisia. The companyr should be considered a good strategic investment. Italy is in gas deficit, Independent has gasr and, perhaps more notably, is seeking to develop strategically important storage facilitatesr that will help temper future gas shortages and ease security of supply. The valuation looksr underwritten by CBM assets with further upside in the form of very near term Tunisianr exploration and potentially, game changing upside if it is able to finally secure permitting forr its proposed Rivara gas storage operation. r r Better Politics Could Lead Italy Towards a Technologically Advanced Energy Marketr Italian Prime Minister Letta took an open-minded approach towards new energy resources, including shale gas, and we hope to see improvements on the technical investigation front in the coming months too. r r Do you know of any shale gas projects in Italy?r r The Independent Resources PLC project in Tuscany should be the only unconventional gas extraction project under way to date. It is believed that, besides Central Italy, there may be resources in the North (the Po Valley) and probably in other areas. However, deeper investigation is needed through specific studies. Regarding the first experiments carried out in Tuscany, the press has mentioned that Independent Resources PLC uses a “hydraulic fracture operation coupled with a ceramic proppant.r r What is the regulatory framework for shale gas operators in Italy? Are there any specific laws applicable only to shale gas operators (and not to companies involved exclusively in conventional gas activities)?r r There are no specific regulations concerning shale gas in Italy. r r ¾ CBM news: Recent news on the CBM front has been extremely positive. Not only did thisr confirm very gassy coal but also suggests shale gas potential and the ability to frac bothr zones enhancing their potential commerciality. In addition new licence applications couldr double the size of resource from around 92bcf currently. A minor negative is that ther additional zone will necessitate a new work programme and move back production but thisr is largely positive as such a programme will aim to enhance the production rate andr therefore value of the resource.r ¾ Free carry on Tunisian exploration: IRG has an 18.97% interest in the Petroceltic‐operatedr Ksar Hadada permit, onshore Southeast Tunisia. The Ksar conventional oil targets haver prospective* resources of 320mmbls, with a risk weighted potential of 43.7m for the firstr two wells (see section following). Seismic data completed in January identified a number ofr prospects and 2 (potentially 3) exploration wells are planned for this year, the first of whichr is due to spud in June/July this year with a second to follow immediately after.r Independent is fully carried through the 2010 work programme.r ¾ Storage, the long and winding road: Permitting in Italy is well known to be extremelyr protracted. When it involves a unique gas storage installation in Italy’s industrial heartland,r as in the case of the Rivara Under Ground Gas Storage, there are even more boxes to ber ticked. The prize though is substantial; the company estimates the post planning prospectr to be worth €300‐400m. The pre‐planning involvement of Italian national distributor ERGr greatly enhances the potential and provides a benchmark for valuation of c.€63m (c.£53m)r ‐ extrapolating the implied value of the €9.5m paid for its 15% stake.r ¾ Supportive management: Exec Chairman Grayson Nash holds c.15% of the company and,r as in past rounds, has supported the placing purchasing 200k shares.r ¾ Valuation: For now we value the company predominantly on the CBM and a typicallyr risked valuation for Tunisian exploration. We include very little value for the gas storager which offers considerable ‘post‐planning’ upside. Our price target of 143p thus equates to;r 66.7p CBM; 61.5p Tunisia exploration; 14.6p gas storager r Valuation overviewr Category £m Value Value P/pshr Tuscany CBM 30.5 66.7r Rivara Gas Storage 6.7 14.6r Tunisia Exploration 28.2 61.6r r Totals/Price target 65.4 143.0r Potential Share price Catalysts r Independent has potential for newsflow in relation to each of its 3 arms;r • Exploration, Tunisia: News on advancement and results of exploration in Tunisia, first up Oryxr • CBM, Tuscany: Advancement of work programme potential farm‐out of CBM assetsr • Gas Storage, Rivara: Granting of licences for gas storage in Rivara would have a material impact on valuation in our viewr CBM – Medium term, with excellent well recent results r IRG’s CBM acreage is located in Tuscany. Independent was awarded the Casoni exploration licence adjacent to the south ofr Fiume Bruna with the environmental impact study for the Casoni licence currently under review. Fiume Bruna has a prospectiver resource of 92 bcf. Independent has recently conducted hydraulic fracturing on the Fiume Bruna 2 well which yielded veryr positive results, suggesting a greater resource and an additional shale play.r The work programme is aimed at proving the commercial prospect for Fiume Bruna this year and recent fraccing results suggestr greater potential than originally envisaged. We have ascribed 66.7p of value of for the CBM assets, which accounts only for ther licenced acreage. We ascribe 83p per mcf of value for the assets and apply a 50% risk discount which also incorporates somer dilution for farm out (which now seems likely).r Tunisia Exploration – near term, with significant high risk exploration upside potentialr The Tunisian prospects are attractive late stage exportation opportunities with relatively high possibility of success (PoS) ofr >30%, which though still high risk is relatively attractive in terms of exploration. Two prospects are to be drilled this summer. Ther first prospect is Oryx (well scheduled to spud immanently). Oryx has P50 gross prospective recoverable resource estimate ofr 25mmbls and an ascribed possibility of success at 34%. Drilling the second and larger Sidi Toui prospect is expected to followr immediately. Sidi Toui has a P50 gross prospective recoverable resource estimate of 88mmbls and a higher PoS 40%. r We have been fairly conservative in our means of valuation for Tunisia. Firstly, we have only valued the 2 initial wells set to spudr this summer and not the wider prospect, in so doing ignoring a further prospective 207mmbls. Second, while we have used ther appropriate PoS ratios (34% & 40%) we have ascribed a low value per barrel of £3.4 (a low NPV per barrel) to arrive at our in‐situr valuation of £28.2m net to IRG or 61.5p per share (£148.6m in total for the two prospects). To provide an indication of potentialr upside (as discreet to valuation which must always be appropriately risk weighted) on and un‐risked basis the same methodologyr would suggest £72.8m of value net to IRG or c.160p per sharer r Rivara Gas Storage – very attractive r Rivara's working capacity, estimated at c.113 bcf would make it one of the largest underground gas storage facilities in Europe.r The value of gas storage assets can really be attributed to the differential between winter and summer time gas pricing i.e. ar hedge on buying gas in the summer and selling it at better pricing in the winter. Thus simplistically the summer winterr differential x the number of storage units – costs = potential value of gas stored, which can then be appropriately ascribed anr NPV valuation. In truth ultimately this is more a utility infrastructure play and we would expect a farm out down the lone for ther heavy capex phase of the project thought to be around $400m. The company has advanced its planning application to within twor stages of completion but with the 120 days timescale for the first already passed, timing for an eventual decision is reallyr anybody’s guess. r While we have focussed on the risk, it is also appropriate to mention political will behind the project. With Italy, heavily importr dependent for its gas (with Algeria and Russia supplying around 33% combined) prone to blackouts and security of supply is a keyr issue. A recent letter from Prime Minister Berlusconi specifically outlined the strategic importance of the Rivara storage project.r With €300‐400m value the gas storage assets are potentially the most valuable of the company’s three main assets, but ofr course are largely worthless without permitting. Thus we have taken a cautious view, discounting the value implied by the ERGr deal by a massive 85% to account for the regulatory risk. It is not difficult to envisage the much geared impact merely removingr that risk (which would immediately be warranted following approval in our view). The pre‐permitting undiscounted value perr share is around 97p and merely accounting for the pre‐planning transaction value, the true value of the project post planning isr likely to be multiple but this still looks some way off. Even following approval, there will be a two year appraisal period includingr 3D seismic acquisition....

Score: 75.00