Top Gainer: Bow Energy (BOW)

 Closing price  $1.215
 Change  +0.095
 % change  +8.5%


Broker Calls

WilsonHTM: BUY, price target of $1.80

Deutsche Securities holds 5% of BOW

Merrill Lynch holds 5.1% of BOW

Following on from Monday’s whopping 10% gain, BOW was again the day’s biggest gainer on Tuesday, soaring 8.5% on a day the broader market slumped 1.6% as the debt rally in the US faltered.

After hitting a 12-month low of 73.5 cents in mid-May BOW has bounced strongly, soaring 60% over the past two months to hit $1.215 on Tuesday. Because of the recent rally and today’s 8.5% jump it is now down just 10.3% for the year to date, compared to the ASX200 which is down 3% for the year.

According to its website, BOW’s “primary business is the discovery and commercial production of oil and coal seam gas fields with projects in several of Australia’s producing Basins”. The focus is on exploration of coal seam gas (CSG), although it is also involved in oil exploration. It has eight CSG projects in Queensland within the Bowen and Surat basins. The next step for BOW is to become a fully fledged producer to supply gas to local and international markets.

With two of the world’s largest investment banks as major shareholders – both Deutsche and Merrill Lynch own 5% of BOW – there’s some serious weight behind the company. And with its announcement on Jul 19th that certified 2P reserves by 60%, the company seems to be moving in the right direction. CEO John De Stefani says that the new gas reserves at Blackwater are a further step towards achieving its goal from the current funded work programs. “Pilot programs are continuing on the Blackwater CSG Field with a series of pilot wells aimed at obtaining further reserve upgrades,” said De Stefani.

If you’re interested in more background information on BOW and where the company currently sits, you can read the Quarterly Activities Report, released on Friday.

Back in February this year John Young, Wilson HTM resources analyst had a $1.80 target on BOW. “Rerating catalysts include achieving commercial flow-rates at its Blackwater and Norwich Park projects, conversion of 3P to 2P reserves and securing major gas supply contracts,” he said. Although it’s a year old now, you can access one of Young’s previous reports from last year on the Bow Energy website:

Bow Energy Limited – Reserve targets and RSPT

Based on Thomson Reuters data, 100% of analysts have a buy on BOW, no change from 3 months ago, although it must be noted that there are only three analysts covering the stock. 


Chart: Share price over the year to 01/08/2011 versus ASX200 (XJO)

Stock code: BOW

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