London-based international broker and equity capital markets advisor SP Angel Corporate Finance LLP has initiated coverage on Rex International Holding at a target price of S$1.19. Excerpts from the report:
Rex has established significant licence positions in a number of highly attractive oil provinces. This has been achieved in relatively short order and leveraging off of its key differentiating factors, which are its exclusive access to cutting-edge technologies such as Rex Virtual Drilling, Rex Gravity and Rex Seepage.
Rex Virtual Drilling has been demonstrated to be highly effective through blind trials and live applications at identifying the most prospective drilling locations, and with the Company's recent Omani exploration well, which flowed in excess of 3,000 barrels of oil per day (bopd), providing further support of their use of ground-breaking technologies to find oil.
Dan Brostrom, executive chairman of REX International. NextInsight file photo The Company is funded through its near-term exploration and appraisal programme. With the news of the drilling on its recently acquired Trinidadian acreage and the Company’s ambition to put the Omani discovery on early production in the next 8-12 month period, there is also the prospect of near-term cash flow.
Valuation
We have valued the company's portfolio using our usual DCF methodology, and conventional geological risking; we have not applied any additional premium to the geological de-risking that might accrue from the use of Rex Virtual Drilling technology.
This results in a target price of S$1.19 per share.
However, we have provided for an increase in the technical to commercial chance of success risking; and the recently acquired Trinidadian acreage has not been included; we will provide further analysis at a later date.
However, we have provided for an increase in the technical to commercial chance of success risking; and the recently acquired Trinidadian acreage has not been included; we will provide further analysis at a later date.
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