Edison Investment Research - AJ Lucas Group (AJL) AJ Lucas Group - Consent received for fracturing first horizontal well

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Edison Investment Research

Sanjeev Bahl

AJ Lucas Group - Consent received for fracturing first horizontal well

Cuadrilla becomes the first UK operator to have been awarded final consent to hydraulically fracture an onshore horizontal shale exploration well in the UK. On 24 July 2018, the Department for Business, Energy and Industrial Strategy awarded Cuadrilla consent to fracture the first of two horizontal wells at Preston New Road (PNR) well site. The company will now apply for consent to fracture the second of two wells drilled at PNR. Cuadrilla has previously indicated that initial results from a 90-day flow test are expected in Q418. The valuation of UK shale assets remains uncertain; however, our recent analysis indicates a 67% chance of commercial success (NPV15>0), which appears to be materially higher than current market expectations suggested by the valuations of listed small/mid-caps including AJL, IGas and Egdon. Our current P50 valuation of AJL stands at A$0.86/share.

25/07/2018 2 EN

Underlying

AJ Lucas Group

AJ Lucas Group is an infrastructure, construction and mining services group focusing on providing services to the energy, water and wastewater, resources and property sectors. Co. has three operating segments: drilling, which provides drilling services for the degasification of coal mines and the recovery and commercialization of coal seam gas and associated services; engineering and construction, which provides construction and civil engineering services, as well as installation of conduits and pipes using horizontal directional drilling; and oil and gas, which explores for and commercializes unconventional and conventional hydrocarbons in Europe, Australia and the U.S.

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AU000000AJL1 Australian Securities Exchange Australia

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Sanjeev Bahl

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AJ Lucas Group - Consent received for fracturing first horizontal well

Monthly LMI Update Independent Investment Research

AJ Lucas Group - Riverstoneâ€™s interest in Cuadrilla acquisition

Feasibility Study Results in December to be a Catalyst for this Junior

AGBA - A transformational deal

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Norcros - Sale of Johnson Tiles UK agreed

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