Thursday, December 26, 2013
Rex: UOB Kay Hian maintains Buy with $1.27 TP. While the oil in the first exploration well is not commercially viable, all is not lost as the presence of hydrocarbons (oil) still underpins Rex’s claims in its ability to find oil. It is important for investors to look at 1 or 2 more well drilling as a more accurate representation of the effectiveness of Rex’s Technology. Rex will be drilling 5 to 7 onshore well in its concessions in Trinidad & Tobago in 2014, with the first drilling to be carried out in 1Q2014. Drilling at Oman is anticipated to also commence again within 2 weeks. The non-commerciality of the oil well could be due to many possibilities such as low pressure at reservoir, oil being too viscous or too heavy etc. Nonetheless, datasets acquired from the coring and logging programmes of the first well will give engineers a better understanding of the Oman prospect, and will aid in the identification of the second exploration well.