Are These 3 Stocks Charging Up - LCK, EXR And RES?

  • Mar 27, 2019 AEDT
  • Team Kalkine
Are These 3 Stocks Charging Up - LCK, EXR And RES?

Leigh Creek Energy Limited

Leigh Creek Energy Limited (ASX: LCK) reported on 27th March 2019 that its Leigh Creek Energy Project (LCEP) received a PRMS certification of 1,153 PJ 2P from Denver based MHA petroleum consultants. With this confirmation, LCEP becomes Australia’s 2P gas reserve (largest uncontracted and undeveloped) delivering the East Coast area. The result has an impact on not only LCK, it also has an effect on the overall Australian gas market since the Eastern Australian gas consumers are presently facing an energy emergency. As per a study, the gas reverses were projected to be no longer able to satisfy the demand from 2022. The LCK’s 2P resource gas reserves are situated in the Telford basin. As per the Australian Competition and Consumer Commission (ACCC) examination of the gas reserves and resources, LCK’s reserves are the same size as the total Cooper Basin.

Further drilling, seismic work, and production testing could help LCK PRMS assessment, and it is expected to increase over time. The company has an additional opportunity for future reserve upgrades of the 2C contingent resource. As per the  company’s estimate, the implied valuation of the 2P reserves alone is more than A$2 billion. To commercialise the company could go for multiple paths, 1) Utilise gas to manufacture ammonia-based fertiliser products or/and 2) Sale of synthetic natural gas. To be sold into the Australian East coast market, both the options have substantial positive economic yields.

The company’s stock closed the day’s trade at A$0.410 and was up by whopping 30.159 percent (As on 27 March 2019). The share price has been in a strong up move. In the past three months, the share price has moved up by 162.50 percent (As on 26 March 2019). It is currently trading near its 52-week high price of A$0.420.

Elixir Petroleum Limited

Elixir Petroleum Limited (ASX: EXR) released its energy and minerals conference presentation. The company has 100 percent working interest in the 7 million net acres Nomgon IX coal bed methane (CBM) in a major coal-bearing sedimentary. The company has identified a Giant CBM prospective resource for Nomgon IX PSC, with the best estimate of 40.1 Tcf (un-risked recoverable) and 7.6 Tcf (risked recoverable) and the same has been independently certified by ERC Equipoise Pte Ltd (ERCE). The Nomgon IX CBM PSC is strategically located close to the high priced and fast-growing Chinese gas market. It is situated close to the Chinese border. It is to be noted that China imports gas from every possible source and China continually seeks to diversify its sources of supply. Due to the proximity, the Mongolian CMB is expected to be highly cost competitive compared to the alternative sources of gas for the Chinese market and including Australian imports. The Chinese government has plans to increase the gas demand by 300 percent in the next 15 years. On the operating front, the company has received a proposal from 8 contractors for seismic operations. The necessary approvals and licences as progressing. On the drilling front, preliminary HQ Drilling Program has been completed by Brisbane based drilling advisor.

Further, local drilling contractors are already identified in Mongolia. The tendering process is scheduled to begin in Q2 2019. Elixir is selling its Acerage to Entek (ASX: ETE) energy for shares. The Acreage is considered on trend to recent large oil discoveries. On sale, Elixir would distribute ETE shares for two Elixir shares held. The record date is 12 April 2019.

The shares of EXR closed the trading session at A$0.031 up by 19.231 percent. However, the share price has been on a down-trend in the recent past, and it has returned -45.83%, -21.21%, and -29.73% in the past six months, three months, and one month respectively.

Resource Generation Limited

The coal mining company Resource Generation Limited (ASX: RES) has witnessed its share price surge up by over 63 percent in the past five trading days (As on 26th March 2019). Due to the excessive price movement on 26th March 2019, the company received a price query from the exchange. In response to that, the company clarified that there is no pending news to be announced by RES.

The company reported a net loss of $6.7 million in HY19 vs. a net loss of $1.2 million in HY18. The net loss included administrative and corporate expense of $1.5 million. The company declared Employee expenses of $1.2 million, interest expense of $1.3 million and an unrealised foreign exchange loss of $2.7 million. The company reported cash and cash equivalent of $1.2 million as on 31-December-18 vs. $1.7 million on 30-June-18

The company in mid-March 2019 reached a conditional agreement with the Nobel group to provide additional working capital requirements to its partly owned subsidiary, Ledjadja coal (Pty) Ltd. The loan is raised to cover the projected needs up until 30 June 2019.

The shares of RES closed at A$0.115 on ASX up by 21.053 percent (As on 27 March 2019). The shares have delivered a return of 23.38%, 11.76%, and 35.71% in the past six months, three months, and one month respectively.


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