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Central Petroleum worth eight times current value according to Bakers Investment Group

Central Petroleum (ASX: CTP) has received a Strong BUY from Bakers Investment Group.

The following is an extract from a report by Bakers Investment on Central Petroleum.

Last traded: $0.063 (15th July 2011)
Target price: $0.48 (in the next twelve months)


Central Petroleum is a junior exploration and production company with extensive granted and pending tenement acreage in Central Australia, predominately in the Northern Territory totalling over 70 million acres, almost entirely 100% net owned.

Within this acreage large resources of oil, natural gas, helium and coal have been identified and/or inferred by independent geological assessment.

These resources are located within four main geological structures; the Amadeus, Pedirka, South Georgina basins and the Lander Trough of the Wiso Basin.

Central Petroleum has identified a number of oil and gas prospects in the already-producing Amadeus Basin and the Pedirka Basin which could be brought to market relatively quickly following further drilling to determine the full extent of the resources.

The company is in a strong position to exploit available resources utilising existing geological data supplemented by more recent drilling and seismic studies, and has relatively close access to the relevant infrastructure, particularly the rail link to Port Darwin and an existing gas pipeline also to Darwin.

In addition to its oil and gas prospects, Central Petroleum has identified significant coal assets in its Pedirka Basin tenements through independent geological assessment.

These coal assets have potential for coal mining, coal-to-liquids (NYSE:CTL) and underground coal gasification (UCG).

Based on a “sum of parts” assessment of Central Petroleum‟s short time-to-commercialisation projects, and the company as a whole, including factoring in the risks faced in bringing these projects to an operational phase; we have given Central Petroleum a valuation of $0.48 per share and recommend it as a STRONG BUY.

Although significantly higher than current trading price, this valuation does reflect a heavily risked and realistic assessment of the value of CTP‟s quick-to-market projects for which CTP has development plans and development capital reserves.

This valuation does not include any value potential from Central Petroleum‟s longer term projects, such as unconventional resources or coal monetisation, which will add additional value to the company as the development plans for these are finalised.