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Greenfields Petroleum Corporation - March 2018 Update

Houston-based Greenfields Petroleum acquires interests in undeveloped oil and gas fields overseas. Following the collapse of the Soviet Union, Azerbaijan offered up its best oil and gas projects to international companies. GNF now has an 80% stake in the impressive Bahar Project. It is a very good address, home to billion-barrel oil and multi-trillion cubic feet gas projects proved up by neighbours including BP and Total.

• Oil & gas production expected to treble to 18,000 boepd in 2020

  A program of recompletions & workovers has allowed production to increase substantially and operating costs to be significantly reduced. Production is now going to be boosted further through waterfloods on the Gum Deniz oil field and development drilling of the Bahar NKP gas horizons which were both highly successful in Soviet times.

• 2017 year-end reserves P2 of 53 mmboe & PV(10) US$538 million

  Lots of technical work has been going on behind the scenes by Greenfield’s backer Vitol. Reading between the lines, many opportunities seemed to have been ruled out of the reserves at this stage by GLJ. Once these opportunities are de-risked, a lot could be added to reserves in the future.

• Miocene play contains a 4-way structural close covering up to 20km²

  Seismic has revealed this large-scale opportunity. A good analog exists in AOC’s successful 2015 Hovsan 1870 well which produced 16 mmcf and 640bcpd. Internal estimates suggest the potential to test 86 mmboe.

• DCF analysis reveals upside potential of 320%

  Discounting forecast cash flows from just the program of recompletions and workovers at a very conservative rate gives a target price of C$0.59. We update coverage of GNF and retain our Conviction Buy stance.