OEL released its full-year results which show the strong free cash flow potential of the SM71 field which is producing about US$2m to US$2.5m of free cash flow per month. OEL recently upgraded the SM71 reserves to 6.5mmboe which by our estimates will more than double field life. OEL is currently participating in the drilling of 2 wells and has another 9 planned over the next 12 to 18 months. This program is fully funded on a dry hole basis from free cash flow and cash on hand from the recent capital raising. We maintain our BUY recommendation with an increased valuation of AU$0.13.
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