AJ Lucas Group

AU: AJL

AU$75m market cap

AU$0.1 last close

AJ Lucas has investments in the exploration and commercialisation of shale gas in the UK through licence equity interests and a stake in Cuadrilla. AJL also has two Australia-based operating business units: Drilling Services (LDS) and Engineering & Construction (LEC).

Investment summary

AJ Lucas offers investors exposure to the most advanced UK shale appraisal programme. Current activity is focused at Preston New Road where AJL became the first operator to have flowed gas from a horizontal shale gas well in the UK. Recovered gas had a 96% CH4 content, no H2S and minimal CO2. Gas flowed at a peak rate of 0.2mmcfd with only two of the 41 stages fully fractured. AJL estimates that a 2.5km horizontal well, with all stages fractured, would have a potential initial production rate of 3-8mmcfd. Our last valuation stands at A$0.93/share. Given current uncertainty around Bowland shale type curves, well costs, rig availability and gas prices, we use a probabilistic approach to valuation.

Y/E Jun
Revenue (A$m)
EBITDA (A$m)
PBT (A$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2017A 122.6 (3.8) (36.3) (6.67) N/A N/A
2018A 127.1 15.4 (16.7) (1.14) N/A N/A
2019E 127.2 13.5 (8.9) (1.47) N/A 3.4
2020E 129.7 13.9 (4.0) 6.89 1.5 6.2
Last updated on 22/03/2019
Industry outlook

AJ Lucas has investments in the exploration and commercialisation of shale gas in the UK through licence equity interests and a stake in Cuadrilla. Central government supports the exploitation of shale gas resource in order to increase domestic energy security and to support intermittent renewable energy sources.

Last updated on 22/03/2019
Sector
Oil & gas
Share price graph
Balance sheet
Forecast net debt (A$m) 86.3
Forecast gearing ratio (%) 67
Price performance
%
1m
3m
12m
Actual (37.5) (54.5) (71.4)
Relative* (37.9) (60.0) (72.5)
52-week high/low A$0.4/A$0.1
*% relative to local index
Key management
Phil Arnall Chairman
Austen Perrin CFO
Marcin Swierkowski Company Secretary

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