Silvermere Energy - Oil and gas production at Mustang Island improves further

Silvermere Energy Oil and gas production at Mustang Island improves further Latest operations update revealed 32% and 4% improvements in gas and oil production respectively on a month-on-month basis. This works out at 1,912,068 scf of gas and 308 barrels of oil net to Silvermere. This production comes from the well flowing for 73% of the time in February. The corporate strategy is to expand by acquiring appraisal and production opportunities in oil and natural gas projects either onshore or shallow offshore the US; that offer the promise of early cash flow. Finance is available for this from a prudently drawing down on the £5m SEDA agreed with Yorkville in December 2012. Mustang Island consists of three other existing identified well locations within this licence area. Silvermere's agreement on the acquisition of the interest in Mustang Island gives the company a far larger stake in these successive additional wells. Successful production from the I-1 well has the potential to significantly upgrade the company's reserves at Mustang Island and its valuation. Based on an independent valuation of the 2P reserves on a fully diluted basis equates to a target price of 20p. Click to Download Full Report Table: Financial overview Year to 31st Dec. 2010A1 2010A2 2011A 2012E Revenue (£000) 229 0 0 120 PBT (£000) 716 (153) (1,371) (1,000) EPS (p) (96) (16.9) (13.7) (2.5) Dividend (p) 0.00 0.00 0.00 0.00 Source: GECR and Company. Notes: ¹ - 12 months to 31 May 2010; ² - 7 months to 31 December 2010 Speculative Buy Target price 20p Key data Price 6.75p 52 week high/low 19.25p / 6.38p Primary exchange AIM EPIC SLME Shares in issue 34.6 m Market Cap £2.3m Sector Oil & Gas Affiliations: Silvermere is a corporate client of Bishopsgate Communications, which is a subsidiary of GECR's parent company Rivington Street Holdings. Important: All disclaimer information can be found on the last page of the document

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