cooper energy limited (coe) 17 april 2012 · the hammamet (coe: 35%) and the nabeul (coe: 85%)...

The 3D seismic

––

Recommendation BUY

Previous Recommendation BUY

Current Share Price $0.65

12 Month Price Target $0.90

Price Target Methodology Risk weighted DCF

DCF Valuation $1.10

Market capitalisation $190.3 m

Liquidity – Daily Value

$0.30 m

Board of DirectorsBoard of DirectorsBoard of DirectorsBoard of Directors

Laurie ShervingtonLaurie ShervingtonLaurie ShervingtonLaurie Shervington Chairman

David MaxwellDavid MaxwellDavid MaxwellDavid Maxwell Managing Director

Jeffrey SchneiderJeffrey SchneiderJeffrey SchneiderJeffrey Schneider Non exec. Director

Ian GregoryIan GregoryIan GregoryIan Gregory Company Secretary

See: See: See: See: www.cooperenergy.com.auwww.cooperenergy.com.auwww.cooperenergy.com.auwww.cooperenergy.com.au

Price ChartPrice ChartPrice ChartPrice Chart

Source: Yahoo Finance

Three Key Points

• Strong financial position with $68 mn in cash, no debt and Australian oil production providing solid operating cash flow. Current share price is equivalent to the value of the Company’s cash and NPV of Australian 2P reserves and recent discoveries.

• Due to perceived sovereign risk, Australian investors are ignoring the underlying value of Tunisian assets, including an oil discovery with P50 contingent resources of 111 mn bbls with an unrisked value of $1.12 per COE share.

• Extensive western flank exploration program in the Cooper Basin has the potential to maintain the 2P replacement ratio at an average of greater than 100% per annum for some time to come.

Cooper Energy Limited (COE) Valuation update

17 April 201217 April 201217 April 201217 April 2012

Nicholas Wirubov

[email protected]

+ 61 3 9618 8251

Important InformationImportant InformationImportant InformationImportant Information

Octa Phillip is engaged by Cooper Energy to carry out capital markets work. For Disclosures, refer to the back page under “Important Information”.

Octa Phillip Securities Cooper Energy ( COE)

Page 1

Table of Contents

Company BackgroundCompany BackgroundCompany BackgroundCompany Background .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 2222

TunisiaTunisiaTunisiaTunisia ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 3333 Bargou Exploration Licence (COE: 30%, after completion of farm out obligations) .......................................................................... 3 Resources Summary ..................................................................................................................................................................... 4 Hammamet West Development Concept ....................................................................................................................................... 5 Summary of Tunisian PSC Terms .................................................................................................................................................. 5 All Contractor income and petroleum tax liabilities are paid out of ETAP’s share of Profit Oil. .......................................................... 5 Hammamet West Valuation assumptions ....................................................................................................................................... 6

Asset ValuationAsset ValuationAsset ValuationAsset Valuation ............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 6666 Hammamet West .......................................................................................................................................................................... 6 Valuation Upside ............................................................................................................................................................................ 7

Valuation SensitivityValuation SensitivityValuation SensitivityValuation Sensitivity .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 7777

Financial PositionFinancial PositionFinancial PositionFinancial Position ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 8888

RecommendationRecommendationRecommendationRecommendation ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 9999

Appendix 1Appendix 1Appendix 1Appendix 1 ............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 10101010 Introduction to Dragon Oil Plc ...................................................................................................................................................... 10

Recommendation CriteriaRecommendation CriteriaRecommendation CriteriaRecommendation Criteria ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 12121212

Octa Phillip Securities Cooper Energy (COE)

Page 2

Company Background

Cooper Energy (ASX Code: COE) is an Australian based company exploring for and producing oil in Australia and Indonesia. The main focus of activity is the South Australian section of the Cooper Basin where its net oil production is approximately 1,700 barrels per day from a number of conventional oil fields in PEL 92 and one in PEL 93. In the Otway Basin, COE holds an interest in PEL 495 that is prospective for both conventional and unconventional oil and gas. In recent presentations, management was clear in its objective in adding gas production opportunities to its Cooper Basin and Otway Basin portfolio of assets.

Internationally, COE holds interests in three offshore permits in the Gulf of Hammamet in Tunisia. The Bargou Exploration Permit contains the Hammamet West oil field that was discovered in 1967 and appraised in 1990 when the Hammamet West - 2 well intersected a 192m oil column and recovered oil in two DSTs. COE retains a 30% interest in the license and will be carried through the majority of the costs of drilling the Hammamet West -3 appraisal well in 2012.

Figure 1: Bargou, Hammamet and Nabeul Exploration Licences, TunisiaFigure 1: Bargou, Hammamet and Nabeul Exploration Licences, TunisiaFigure 1: Bargou, Hammamet and Nabeul Exploration Licences, TunisiaFigure 1: Bargou, Hammamet and Nabeul Exploration Licences, Tunisia

Source: Cooper Energy Limited

In a our initiation report released in February 2012, we conducted a detailed DCF valuation of the Cooper Basin assets resulting in the conclusion that the cash backing of COE ($0.23) and the DCF valuation of the 2P reserves ($0.36) less administration ($0.08) for a net asset value of $0.51 was greater than the then trading price of the company of $0.46. At the time, we did not have all the data to allow us to construct a DCF valuation model for the Hammamet West oil field and included a risked valuation for the asset based on a third party valuation metric. Since then, we have completed our own valuation model resulting in an updated valuation for the Company, which is the subject of this update.


Page 3

Tunisia

Extensive acreage Extensive acreage Extensive acreage Extensive acreage holdings in Tunisiaholdings in Tunisiaholdings in Tunisiaholdings in Tunisia provides significant provides significant provides significant provides significant upside valueupside valueupside valueupside value

COE’s Tunisian assets form part of the Company’s core exploration and appraisal focus. The Company currently holds interests in three exploration licences in the Gulf of Hammamet, offshore north eastern Tunisia. The Gulf of Hammamet hosts an active petroleum system with a number of discovered and producing onshore and offshore oil and gas fields.

The target formations in the blocks include sandstones of the Birsa and Fortuna formations as well as limestones of the Ain Grab, Bou Dabbous and Abiod formations. In some areas reservoirs may occur as multiple stacked targets in structural traps.

The Hammamet (COE: 35%) and the Nabeul (COE: 85%) exploration licenses were described in our February report. The 3D seismic acquired in the Hammamet license has been processed and the data has been received by COE. The recently acquired 3D seismic in the Nabeul license is still being processed. No further on-the-ground activity is being planned in either license at present. In this report, we will confine our attention to the Bargou exploration license where the JV is preparing to drill the Hammamet West 3 appraisal well towards the end of CY 2012.

Bargou Exploration Licence (COE: 30%, after completion of farm out

obligations)

The Bargou exploration licence, covering an area of 4,616 km2, was awarded to COE in 2008, following its conversion from a prospecting permit. The majority of the licence is located immediately offshore from the Tunisian coast with a small section located onshore. The licence contains a proven hydrocarbon system with a number of onshore and offshore producing oil and gas fields adjacent to the licence and a number of others under development. Of direct interest to the JV is the Hammamet West oil discovery, first drilled in 1967 when a seven metre oil column was intersected in the Birsa Sandstone in the Hammamet West 1 well.

Figure 2: Proximity of oil and gas discoveries to COE’s licensesFigure 2: Proximity of oil and gas discoveries to COE’s licensesFigure 2: Proximity of oil and gas discoveries to COE’s licensesFigure 2: Proximity of oil and gas discoveries to COE’s licenses

Bargou license area is in Bargou license area is in Bargou license area is in Bargou license area is in close proximity to close proximity to close proximity to close proximity to existing producing oexisting producing oexisting producing oexisting producing oil il il il fields and hydrocarbon fields and hydrocarbon fields and hydrocarbon fields and hydrocarbon discoveriesdiscoveriesdiscoveriesdiscoveries


An appraisal well, Hammamet West 2, drilled in 1990 1.8 km to the south west of the Hammamet West 1 well targeted the deeper Abiod Formation. Oil was intersected and DSTs were run with DST 1 and DST 2 recovering 33° API and 27° API oil that together with recently interpreted petrophysical data indicated that a 192 m oil column had been intersected by the


Page 4

well. The Hammamet West discovery lies just twelve km north of ENI’s producing Maamoura oil and gas field that was first discovered in 1988 with the early wells flowing 2,880 bopd and 5,000 bopd of 38° API oil on production tests. The field was brought on stream in 2010, and is producing from a number of formations, including the Abiod formation.

In 2009/10 COE acquired 205 km2 of high resolution 3D seismic data. Interpretation of the data was used to update the mapping for the field and to confirm the distribution and orientation of fractures within the limestone of the Abiod Formation. This information will be used in selecting the location and finalising the well design for the Hammamet West 3 appraisal well as observations from nearby producing fields indicate that high production rates can be achieved in the event that the well encounters an extensive fracture system.

In 2010, COE farmed out a 15% interest in the Bargou Licence to Jacka Resources (ASX Code: JKA). Part of the farm in commitment was met with Jacka contributing to the drilling of the unsuccessful onshore Menzel Horr well. The balance of the commitment will be met when the Hammamet West 3 well is drilled. To further reduce its drilling liability and bring additional technical expertise into the JV, COE farmed out a further 55% of the licence to Dragon Oil. Provided the total well cost for the well is under US$26.6 mn, COE will be fully carried through the Jacka and Dragon farm outs. If the well cost exceeds this amount, COE will pay half the pro rata share for its 30% interest in the permit as the Jacka farm out is uncapped and will carry COE’s remaining 15% interest.

Dragon Oil brings Dragon Oil brings Dragon Oil brings Dragon Oil brings significant technical significant technical significant technical significant technical expertise to the JV’s expertise to the JV’s expertise to the JV’s expertise to the JV’s appraisal drilling of appraisal drilling of appraisal drilling of appraisal drilling of Hammamet WestHammamet WestHammamet WestHammamet West

Dragon Oil is a large independent oil and gas exploration and production company that is listed on the London and Irish stock exchanges and has a market capitalisation in excess of $4 billion. It has substantial reserves of hydrocarbons, including 639 million barrels of oil and 1.6 trillion cubic feet of gas. It brings significant fractured limestone experience through its operation of two oil and gas fields in the Cheleken Contract Area in the Caspian Sea, offshore Turkmenistan where production reached 71,000 bopd by the end of 2011. For a more detailed description of Dragon Oil refer to Appendix 1.

Resources Summary

Even though oil has been encountered in the Birsa Sandstone and Abiod Limestone formations in the Hammamet West discovery, insufficient data has been obtained for the determination of hydrocarbon reserves. The Hammamet West 2 well intersected a 192 m oil column based on the lowest known depth of proven oil from a drill stem test at 3,090 m subsea. Mapping of the reservoir based on the latest 3D seismic indicates that the structural spill point of the reservoir can be placed at 3,190 m subsea, leading to one source of uncertainty in determining the oil in place.

Table 1: Hammamet West gross oil in place volume and COE’s contingent resourceTable 1: Hammamet West gross oil in place volume and COE’s contingent resourceTable 1: Hammamet West gross oil in place volume and COE’s contingent resourceTable 1: Hammamet West gross oil in place volume and COE’s contingent resource

Substantial contingent oil Substantial contingent oil Substantial contingent oil Substantial contingent oil resource identified in resource identified in resource identified in resource identified in Hammamet West through Hammamet West through Hammamet West through Hammamet West through previous drillingprevious drillingprevious drillingprevious drilling

Oil in Place (mn bbls)Oil in Place (mn bbls)Oil in Place (mn bbls)Oil in Place (mn bbls) Resource (mn bbls)Resource (mn bbls)Resource (mn bbls)Resource (mn bbls)1111

P90P90P90P90 P50 P50 P50 P50 P90P90P90P90

Senergy 100

Cooper Energy

Birsa Sandstone 12 3.0 0.9

Abiod Limestone 252 30.3 17.7

Total COETotal COETotal COETotal COE 264264264264 33.333.333.333.3 18.618.618.618.6

Note 1:Note 1:Note 1:Note 1: Assumes COE’s 30% post farm out interest in Bargou Licence


The other main source of uncertainty is the fracture porosity, a key parameter that determines the amount of oil that can be contained in and recovered from the reservoir. COE and an independent group – Senergy – have separately assessed the volume of oil originally in place. In presenting the volume of oil determined by COE, we have selected the Company’s base case, assuming fracture porosity of 0.3% (P90) of gross rock volume and oil down to 3,090 m subsea for the Abiod Limestone. In addition to assessing the in place volume of oil, COE also determined the contingent resource for the Hammamet West discovery. These results are summarised in Table 1, above.


Page 5

Hammamet West Development Concept

Simple development Simple development Simple development Simple development concept should result in a concept should result in a concept should result in a concept should result in a rapid commercirapid commercirapid commercirapid commercialisation alisation alisation alisation of the projectof the projectof the projectof the project

The current development concept for the Hammamet West discovery envisages a similar development to that used by ENI in the development of the Maamoura oil and gas field, comprising an unmanned wellhead platform with sufficient slots for around twelve production wells, water separation and pumping facilities. Produced oil and gas will be piped to an onshore oil processing facility where the oil and gas will be separated with the oil prepared for export via an offshore CALM buoy. Some of the separated gas will be returned to the platform and used for gas lift to enhance the recovery of oil with the balance sold in the domestic market.

Figure 3: Hammamet West development conceptFigure 3: Hammamet West development conceptFigure 3: Hammamet West development conceptFigure 3: Hammamet West development concept


Summary of Tunisian PSC Terms

The production of oil and gas in Tunisia is based on the terms contained in the production sharing contracts (“PSCs”) negotiated with Entreprise Tunisienne d’Activités Pétrolières (“ETAP”), Tunisia’s national oil company. Basic PSC terms include:

• No requirement to provide equity in the project to ETAP at the development phase.

• No domestic market obligations for oil.

All Contractor income and petroleum tax liabilities are paid by ETAP.


Page 6

Hammamet West Valuation assumptions

Table 2: Hammamet West valuation assumptionsTable 2: Hammamet West valuation assumptionsTable 2: Hammamet West valuation assumptionsTable 2: Hammamet West valuation assumptions

Valuation ParameterValuation ParameterValuation ParameterValuation Parameter UnitUnitUnitUnit P50P50P50P50 P90P90P90P90 Valuation ParameterValuation ParameterValuation ParameterValuation Parameter

Recoverable oil Mn bbls 111 62 Recoverable oil

Initial rate Bopd 45,000 30,000 Initial rate

Decline % per annum 15% 18% Decline

Project life years 17 17 Project life

Development Wells 12 8 Development Wells

Development CAPEX US$ mn 530 452 Development CAPEX

OPEX US$/annum 27 27 OPEX

Maintenance per annum % CAPEX 1% 1% Maintenance per annum

Oil price US$/bbl 95 95 Oil price

FX A$ 1,00 = US$ 1.02 1.02 FX A$ 1,00 =

Source: Octa Phillip Securities estimates

In carrying out our DCF valuation of the Hammamet West oil field we assumed the P50 and P90 contingent recoverable resources cases as summarised above:

Asset Valuation

Hammamet West

Table 3: COE asset valuationTable 3: COE asset valuationTable 3: COE asset valuationTable 3: COE asset valuation

Value of the HammametValue of the HammametValue of the HammametValue of the Hammamet West oil discovery isWest oil discovery isWest oil discovery isWest oil discovery is not not not not being recognised bybeing recognised bybeing recognised bybeing recognised by Australian iAustralian iAustralian iAustralian investorsnvestorsnvestorsnvestors

AssetAssetAssetAsset MethodMethodMethodMethod ValueValueValueValue

$ mn$ mn$ mn$ mn $$$$/share/share/share/share

Existing 2P reserves DCF 106.2 0.36

Cash at 31 December 2011 Reported amount 68.6 0.23

Administration to end Cooper DCF (23.1) (0.08)

Existing Production and CashExisting Production and CashExisting Production and CashExisting Production and Cash 111151.751.751.751.7 0.0.0.0.55551111

Oil discoveries and work overs DCF 37.4 0.13

Hammamet West P50 resource1 DCF risked 50% 162.9 0.56

Hammamet West P90 resource1 DCF risked 75% 142.2 0.49

Future administration DCF (9.2) (0.03)

Base Case ValuationBase Case ValuationBase Case ValuationBase Case Valuation 322.1 to 342.8322.1 to 342.8322.1 to 342.8322.1 to 342.8 1111....10 to 110 to 110 to 110 to 1....17171717

Note 1: Either the P50 or P90 valuation case to be used


In our initiation report on COE we used a valuation metric of US$5 per barrel for the contractors’ share of discovered but undeveloped oil as published by PetroCeltic in December 2007. The obvious downside of such an approach is that it is very general in nature. The current analysis avoids this problem by undertaking an economic analysis of a possible field development concept.

While all possible care was taken to ensure that the valuation assumptions were reasonable, the fact remains that while the presence of oil has been proven at Hammamet West, inability


Page 7

to test the wells properly means that at present, no commercial flow of oil has been obtained and the risk remains that the discovery could be non commercial. To take account of this possibility, we have applied a further risk factor to our DCF valuation. In the case of the P50 resource the risk factor applied was 50% and for the P90 resource the risk factor applied was 75%.

The value of the remaining assets and liabilities, including the Cooper Basin, cash and general administration expenses remain unchanged from our initiation report released in February 2012.

Valuation Upside

We continue to believe that our valuation range of $1.10 to $1.17 is still conservative as it does not consider the upside potential of the Cooper Basin or COE’s other interests in the Otway Basin or Tunisia as discussed in our report of February 2012. In addition, we do not ascribe any value to COE’s exploration assets in Poland or Indonesia that have been marked for sale and the value for which has been written down to $5.9 mn.

Valuation Sensitivity

In any DCF valuation of a proposed resources development, the final value is dependent on the assumptions that are made. As Hammamet West is still in the appraisal stage all the input parameters could have a material influence on the final value. As such, our sensitivity analysis looked at over runs in capital and operating expenditure and a delay in project start up as well as the more usual oil price and exchange rate sensitivity with the results summarised in Table 4, below.

While changes in oil price and exchange rates as well as any project delays have a significant effect on the value of the project to COE, the project is almost insensitive to increases in capital and operating expenditure. This is due to the structure of the PSCs where all costs are recovered preferentially before profit sharing with ETAP commences.

Table 4: Hammamet West unrisked valuation sensitivitiesTable 4: Hammamet West unrisked valuation sensitivitiesTable 4: Hammamet West unrisked valuation sensitivitiesTable 4: Hammamet West unrisked valuation sensitivities

Development project is Development project is Development project is Development project is not sensitive tonot sensitive tonot sensitive tonot sensitive to increases increases increases increases in CAPEX and OPEX due in CAPEX and OPEX due in CAPEX and OPEX due in CAPEX and OPEX due to PEC termsto PEC termsto PEC termsto PEC terms

Resource P50Resource P50Resource P50Resource P50 PPPP99990 Resource0 Resource0 Resource0 Resource

$ mn$ mn$ mn$ mn $/share$/share$/share$/share % oil% oil% oil% oil1111 $ mn$ mn$ mn$ mn $/share$/share$/share$/share % oil% oil% oil% oil1111

Base Case 326.9 1.12 30.8 189.6 0.65 35.4

Oil Price US$105.bbl 362.7 1.24 29.7 214.0 0.73 34.2

Oil Price US$85.bbl 284.2 0.97 31.7 169.2 0.54 37.4

FX A$1.00 = US$0.90 369.8 1.26 30,8 214.5 0.73 35.3

FX A$1.00 = US$1.10 302.9 1.03 30.9 180.0 0.61 35.9

CAPEX +10% 324.6 1.11 31.1 188.4 0.64 35.9

OPEX +10% 319.9 1.09 31.1 188.7 0.64 36.4

Project delay 1 year 297.3 1.02 30.8 172.8 0.59 35.4



Page 8

Figure 4: OPEC crude oil basket price from January 1985 to February 2012Figure 4: OPEC crude oil basket price from January 1985 to February 2012Figure 4: OPEC crude oil basket price from January 1985 to February 2012Figure 4: OPEC crude oil basket price from January 1985 to February 2012

Source: Centre for global Energy Studies

As indicated in the figure above before 2003, oil price moved within a relatively narrow range around US$19/bbl. Since then, the price has exhibited a much greater oscillation around a much higher level of US$65/bbl. As a result, while the marker price of dated Brent crude, the expected reference price for oil sales from Tunisia, is around US$120/bbl, we assume a long term real oil price of US$$95/bbl for our base case assumption.

Financial Position

COE is in a very strong financial position. At the end of December 2011, the Company had $68.6 million in cash and operating cash flow from the Cooper Basin of approximately $30 mn per annum for the next two years, assuming no new oil discoveries

Assuming no new fields are brought on stream (an unlikely event given the recent history of discoveries on the western flank) operating cash flow from the Cooper Basin will be in decline just as Hammamet West is expected to come on stream. Our analysis indicates that cash flow net to Cooper will exceed $260 mn during the first 18 months while development costs are recovered before settling down to around $50 mn in the first full year of profit sharing and declining thereafter.


Page 9

Recommendation

Maintain BUY Maintain BUY Maintain BUY Maintain BUY recommendation with recommendation with recommendation with recommendation with short term price target of short term price target of short term price target of short term price target of $0.90 per share$0.90 per share$0.90 per share$0.90 per share

In February 2012 we initiated coverage on COE with a buy recommendation with a 6 month price target of $0.55 per share. Following the sale of 27.8 million shares, equivalent to 9.5% of the issued capital by two parties for $0.50 per share on 29th February a perceived overhang of the two parcels of shares was removed. This, together with a growing realisation by investors of the underlying value of the Company as well as the growing confidence that management will be able to deliver on its promises without the distractions caused by disgruntled shareholders, has seen the share price climb above our short term price target.

With the completion of our valuation work on Hammamet West, increasing our risk weighted value of the Company to between $1.10 and $1.17 per share, it is an appropriate time to re confirm our buy recommendation on the stock with a revised price target of $0.90 per share.

Catalysts that will see the share price appreciate to these levels over the next twelve months include:

• Confirmation of the sale of exploration assets in Poland and Indonesia for a price at or above the written down value of the assets;

• Further exploration success from the new drilling campaign in the Cooper Basin;

• Confirmation that the Rincon discovery in PEL 92 in the Cooper Basin is larger than originally thought following completion of a 3D seismic survey and appraisal drilling;

• Obtaining a commercial oil flow from the Hammamet West 3 appraisal well; and

• Value adding corporate activity as foreshadowed by the Company.

We confirm our rating of COE by maintaining our BUY recommeBUY recommeBUY recommeBUY recommendation.ndation.ndation.ndation.


Page 10

Appendix 1

Introduction to Dragon Oil Plc

Dragon Oil plc is an independent international oil and gas exploration, development and production company with its principal producing asset is the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan.

The Group’s headquarters are located in Dubai, United Arab Emirates. Emirates National Oil Company Limited (ENOC) L.L.C., a company ultimately owned by the Government of Dubai, owns approximately 51% of the Company’s ordinary share capital. Dragon Oil is registered in Ireland with a primary listing on the Irish Stock Exchange and, since 6 April 2010, in accordance with recent changes to the UK listing Regime, has been designated as a premium listing on the London Stock Exchange.

The Group is developing the oil reserves in the Cheleken Contract Area in accordance with the terms of the Production Sharing Agreement (PSA). Under the PSA, Dragon Oil Turkmenistan, as operator, was granted a production licence for the exploration and development of oil and gas resources in the Cheleken Contract Area for a term of 25 years from 1 May 2000 and an exclusive right to negotiate an extension of not less than 10 years.

Dragon Oil has been operating in Turkmenistan for 12 years and has invested more than US$2 billion in expanding the oil production of the Dzheltune and Dzhygalybeg fields in the Cheleken Contract Area. To date, Dragon Oil has refurbished seven existing offshore production platforms and installed six new platforms, 80 km of infield gathering pipelines and a 40 km 30” export trunk line. Today, Dragon Oil is one of the largest foreign investors in Turkmenistan.

Dragon Oil is producing from a significant number of new and old wells and has an aggressive development programme comprising drilling of new wells and an ongoing workover programme. The average daily gross field production has increased from approximately 7,000 bopd in 2000 to over 61,500 bopd of average daily gross production in 2011 with the exit rate of 71,751 bopd at the end of 2011. Dragon Oil is targeting production of 100,000 bopd by 2015.

As at 31 December 2011 Dragon Oil has proved and probable oil and condensate reserves of 658 million barrels and 88 million of oil and condensate in contingent resources, 1.5 trillion cubic feet of gas reserves (corresponding to 250 million barrels of oil equivalent) and 1.4 trillion cubic feet of gas resources.


Page 11

Research

Steve Mor ris Steve Mor ris Steve Mor ris Steve Mor ris +613 9618 8262+613 9618 8262+613 9618 8262+613 9618 8262 Head of Research & COOHead of Research & COOHead of Research & COOHead of Research & COO

Andrew Cleeland +613 8601 2065 Quantitative Analyst Ken Wagner +612 9233 9612 Equities Analyst

Andrew Shearer +613 8601 2624 Resources Analyst Lawrence Grech +612 9233 9635 Senior Resources Analyst

Cameron Bell +613 9618 8283 Equities Analyst Nicholas Wirubov +613 9618 8251 Oil and Gas Analyst

Conor O’Prey +612 9233 9638 Senior Equities Analyst Paul Jensz +613 8601 2068 Agribusiness & Energy Analyst

David Barilla +612 9233 9652 Equities Analyst Pieter Bruinstroop +613 9618 8275 Mining Analyst

Heath Andrews +613 8601 2644 Senior Equities Analyst

Corporate Finance & ECM

James Gre enJames Gre enJames Gre enJames Gre en +61 2 9233 9613+61 2 9233 9613+61 2 9233 9613+61 2 9233 9613 Head of Corpora te FinanceHead of Corpora te FinanceHead of Corpora te FinanceHead of Corpora te Finance

Andrew Champion +61 2 9233 9647 Executive Director Malcolm Ezzy +61 2 9233 9658 Executive Director

Ben Gibbons +61 2 9233 9616 Associate Malcolm McComas +61 2 9233 9659 Senior Advisor

Brooke Picken +61 3 8633 9831 Associate Michael Beer +61 3 9618 8222 Executive Director

Craig Stranger +61 3 8633 9832 Head of Australian ECM Michael Laletas +61 3 9618 8234 Executive Director, Head of International ECM

David Pryles +61 3 9618 8269 Associate Paul Levitt +61 2 9233 9626 Associate

Jae Yoo +61 2 9233 9656 Analyst Sackville Kempton +61 3 9618 8258 Head of Corporate Services

Jonathan Buckley +61 3 9618 8244 Executive Director Sean Kennedy +61 3 8633 9836 Associate Director

Leith Wale +61 3 9618 8253 Business Developmen t Manager , Energy

Yehuda Gottlieb +61 3 8633 9838 Associate

Institutional Sa les

Bruce RolinBruce RolinBruce RolinBruce Rolin +61 2 9233 9651+61 2 9233 9651+61 2 9233 9651+61 2 9233 9651 Head of Institutional SalesHead of Institutional SalesHead of Institutional SalesHead of Institutional Sales

Adam Muston +61 2 9233 9601 Hedge Fund & Derivative Sales James Wilson +61 2 9233 9607 Institutional Research Sales

Chris Chia +61 2 9233 9605 Head of Asian Institutional Sales Mark Pashley +61 2 9233 9641 Senior Sales Trader

Colin Eichenberger +61 3 9618 8214 Institutional Research Sales Matthew White +61 3 8633 9882 Institutional Sales Trading

Craig Stephens +61 3 8633 9881 Trader Michael Cori +61 2 9233 9640 Head of Hedge Fund Sales

Gavin Todd +61 2 9233 9639 Institutional Research Sales Robert Wood +61 3 8633 9880 Institutional Sales

Graeme Philipson +61 2 9233 9610 Institutional Sales Tr ading William Cleland +61 3 9618 8223 Institutional Research Sales

Capital Management

Ben HughesBen HughesBen HughesBen Hughes +61 8 9324 5122+61 8 9324 5122+61 8 9324 5122+61 8 9324 5122 PrincipalPrincipalPrincipalPrincipal

Private Wealth

Tony SmithTony SmithTony SmithTony Smith +61 3 8633 9900+61 3 8633 9900+61 3 8633 9900+61 3 8633 9900 Head of Priva te Wea lthHead of Priva te Wea lthHead of Priva te Wea lthHead of Priva te Wea lth

Allan Moffatt +61 8 7202 1112 Private Wealth Mark Schwarz +61 2 9233 9642 Private Wealth

Amanda Fanning +61 3 9618 8247 Private Wealth Mark O'Brien +61 3 8633 9919 Private Wealth

Andrew Sekely +61 2 9994 5507 Private Wealth Mark Wiseman +61 3 9618 8228 Private Wealth

Ben Ikin +61 3 9618 8231 Private Wealth Matthew Carey +61 2 9233 9602 Private Wealth

Charlie Heerey +61 3 9618 8240 Private Wealth Michael Jeffery +61 2 9233 9619 Private Wealth

Chris Walker +61 3 8633 9928 Private Wealth Nathanial Doust +61 2 9233 9646 Private Wealth

Craig Baillie +61 3 9618 8279 Private Wealth Nicholas Pereza-Mathews +61 3 8633 9921 Private Wealth

Dane Parsons +61 7 3149 8627 Private Wealth Nick Madden +61 2 9994 5502 Private Wealth

Daniel McFarlane +61 3 8633 9917 Private Wealth Nigel Ormiston +61 7 3149 8628 Private Wealth

Daniel Rees +61 3 8633 9922 Private Wealth Oksana Wainwright +61 2 9994 5501 Private Wealth

Darren Levy +61 3 9618 8252 Private Wealth Owen Beattie +61 2 9233 9621 Private Wealth

David Dwyer +61 2 9233 9643 Private Wealth Patricia Harrison +61 2 9994 5505 Private Wealth

Enzo Salvatore +61 3 8633 9924 Private Wealth Patrick Trindade +61 3 8633 9926 Private Wealth Graham Johnstone +61 3 9618 8246 Private Wealth Patrick Verhoeven +61 3 8633 9927 Private Wealth

Greg Lid icky +61 2 9994 5522 Private Wealth Paul Lambrecht +61 8 9324 5144 Private Wealth

Lenny Gross +61 3 9618 8215 Private Wealth Peter Moussa +61 2 9233 9636 Private Wealth

Howard Elton +61 3 9618 8233 Private Wealth Peter Semaan +61 2 9233 9649 Private Wealth James Pearson +61 8 9324 5155 Private Wealth Peter Addison +61 3 9618 8226 Private Wealth

Jason Norval +61 2 9233 9625 Private Wealth Philip Rhead +61 2 9994 5509 Private Wealth

Joe Durak +61 2 9994 5513 Private Wealth Prasanna Wickramatunge +61 3 9618 8270 Private Wealth

John Aldersley +61 2 9233 9617 Private Wealth Ryan Hoffman +61 2 9233 9672 Private Wealth John Miles +61 7 3149 8629 Private Wealth Samuel James +61 2 9233 9657 Private Wealth

John Axsentieff +61 3 8633 9902 Private Wealth Simon Winter +61 8 9324 5133 Private Wealth

Jonathan Di Maggio +61 3 8633 9904 Private Wealth Stuart McClure +61 7 3149 8630 Private Wealth Josh Graham +61 2 9233 9645 Private Wealth Sue McDonald +61 3 9618 8211 Private Wealth

Kate Hanrahan +61 3 8633 9909 Private Wealth Tim Moffatt +61 8 7202 1110 Private Wealth

Laurie Elliss +61 2 9233 9654 Private Wealth Tom Fairchild +61 3 9618 8255 Private Wealth

Luke Pavone +61 3 8633 9920 Private Wealth Xiaoming Huang +61 3 8633 9912 Private Wealth Luke Robinson +61 3 9618 8210 Private Wealth


Page 12

OFFICE LOCATIONS AND DISCLOSUREOFFICE LOCATIONS AND DISCLOSUREOFFICE LOCATIONS AND DISCLOSUREOFFICE LOCATIONS AND DISCLOSURE

MelbourneMelbourneMelbourneMelbourne SydneySydneySydneySydney PerthPerthPerthPerth Gold CoastGold CoastGold CoastGold Coast AdelaideAdelaideAdelaideAdelaide

Level 12, 15 William St

Melbourne VIC 3000

Level 9, 56 Pitt Street

Sydney NSW 2000

21/140 St Georges Tce

Perth WA 6000

Level 9, 1 Corporate Ct

Bundall QLD 4217

Level 1, 16 Vardon Ave

Adelaide SA 5000

Phone: 613 8601 2000

Fax: 613 9600 1138

Phone: 612 9233 9600

Fax: 612 9251 9368

Phone: 618 9324 5111

Fax: 618 6316 4425

Phone: 1300 331 098 Phone: 1300 658 906

Recommendation Criteria

Investment ViewInvestment ViewInvestment ViewInvestment View

Octa Phillip Securities Investment View is based on an absolute 1-year total return equal to capital appreciation plus yield.

BuyBuyBuyBuy HoldHoldHoldHold SellSellSellSell

>20% 20% – 5% <5%

A Speculative recommendation is when a company has limited experience from which to derive a fundamental investment view.

Risk RatingRisk RatingRisk RatingRisk Rating

Octa Phillip Securities Limited has a four tier Risk Rating System consisting of: Very High, High, Medium and Low. The Risk Rating is a subjective rating based on: Management Track Record, Forecasting Risk, Industry Risk and Financial Risk including cash flow analysis.

Disclosure of Economic Interests

The views expressed in this research report accurately reflect the personal views of Nicholas Wirubov about the subject issuer and its securities. No part of the analyst's compensation was, is or will be directly or indirectly related to any recommendation or view expressed in this report.

The following person(s) do not hold an economic interest in the securities covered in this report or other securities issued by the subject issuer which may influence this report:

• the author of this report

• a member of the immediate family of the author of this report

Disclaimer/Disclosure

This publication has been prepared solely for the information of the particular person to whom it was supplied by Octa Phillip Securities Limited (“Octa Phillip”) AFSL 246827. This publication contains general securities advice. In preparing the advice, Octa Phillip has not taken into account the investment objectives, financial situation and particular needs of any particular person. Before making an investment decision on the basis of this advice, you need to consider, with or without the assistance of a securities adviser, whether the advice in this publication is appropriate in light of your particular investment needs, objectives and financial situation. Octa Phillip and its associates within the meaning of the Corporations Act may hold securities in the companies referred to in this publication. Octa Phillip believes that the advice and information herein is accurate and reliable, but no warranties of accuracy, reliability or completeness are given (except insofar as liability under any statute cannot be excluded). No responsibility for any errors or omissions or any negligence is accepted by Octa Phillip or any of its directors, employees or agents. This publication must not be distributed to retail investors outside of Australia.

Disclosure of Corporate Involvement

Since January 2011, Octa Phillip have been engaged by Cooper Energy Limited for institutional marketing services – particularly Asia and potentially other overseas markets as deemed appropriate

Octa Phillip Securities does and seeks to do business with companies covered in its research.

Octa Phillip Securities reports are available on Bloomberg, Reuters, FactSet, Capital IQ and www.octaphillip.com

cooper energy limited (coe) 17 april 2012 · the hammamet (coe: 35%) and the nabeul (coe: 85%)...

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