Investors have seemingly forgotten about AWE Limited's (ASX:AWE) giant Waitsia oil field that was discovered back in September and sent the company up to 52-week highs of $1.99.
Shares have since relapsed to $1.38 as weaker oil prices drag ASX producers down, which means today's prices could be a pretty good entry point for investors focused on the medium to long term.
The primary attractions of the Waitsia field are its proximity to existing infrastructure and its huge size; it contains a 'best estimate' of 360 billion cubic feet (bcf) of gas, which AWE shares 50-50 with partner Origin Energy Ltd (ASX: ORG).
Despite low oil prices expected to stick around for the foreseeable future thanks to OPEC's recent decision not to cut production, natural gas prices have risen 10% so far this year and analyst Morningstar thinks AWE could be quite close to commercialising the Waitsia field.
Morningstar's $3.00 fair value target on AWE however does rely on the assumption of long-term oil prices of around AU$100 per barrel, which may not be attained in the near term if oil supply continues to outstrip demand.
However when you factor in that AWE is planning massive increases in its production to 10 million barrels of oil equivalent and over $500 million in EBITDAX ('x' for exploration) by 2018, then prices of $1.38 look quite good indeed.
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