More Information: Eden Energy Corporation

Source: Equity Research The Swiss Research Group
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Eden Energy Corp. (OTCBB: EDNE) is for the aggressive speculator. It is among our more volatile, risky and high potential holdings but as the news below shows it is also a great story. The company should begin drilling its Chinchaga Alberta wildcat this December. The play has 300 to 500 Bcf fields on three sides and its structure’s size is estimated to be about 500 Bcf. As a good in-dication of the quality of the wild-cat, its driller Nabors Drilling, has also farmed into the play. Eden has a 50% interest. Every 100 Bcf of proven reserves in this area is worth roughly $200 million.

Last September 22nd Eden said it had acquired a 75% work-ing interest to develop part of the 20,000 acre, Ant Hill unit that is held by EnCana Oil & Gas (USA). The acre-age is on the eastern flank of the White Pine River Dome gas field in Colora-do’s Piceance basin. Eden will have at least 64 drilling locations to develop. Wells in the area typically cost $1.9 million to drill and complete, produce 710 Mcf per day and have reserves of 1.07 Bcf per well.

At current strip the project should generate positive cash flow in year four and $7 million by year five and by year eight cash flow peaks at $19 million. The project’s PV10 value net to Eden, is $39.6 million. Their is good potential to in-crease drilling density doubling the number of development locations. There is also the potential to expand the deal to about 500 wells. Better drilling and completion techniques could also increase the producable reserves to about 1.5 Bcf per well. Both events would greatly increase the farm in’s value.

The deal also provides great leverage if oil and gas prices increase as we expect. At an oil price of $75 per barrel (what Goldman Sachs is predicting) and $7 per Mmcf gas, the project’s year five cash flow is $12.4 million and by year eight it jumps to $24.1 million. Its PV10 is then $67 million or roughly $1.50 per share. In terms of risk versus reward Eden now has an ideal combination of two exceptional, high risk high impact wells spudding in the coming months (Chinchaga and super giant Noah – to be drilled this spring) combined with a development play that en-sures the company a relatively low risk growth base for years to come. There are still a couple of months before drilling is to begin consequently speculators wishing to play this one would be well advised to buy 50% now and wait for a potential pull back to $1.40. Make sure you are positioned by late November as the Chinchaga is a highly anticipated wildcat and its shares will likely move higher as its spud date nears. A speculative buy. For more details see www.EquityResearch.li  under “portfolio”.