Cuadrilla becomes the first UK operator to have been awarded final consent to hydraulically fracture an onshore horizontal shale exploration well in the UK. On 24 July 2018, the Department for Business, Energy and Industrial Strategy awarded Cuadrilla consent to fracture the first of two horizontal wells at Preston New Road (PNR) well site. The company will now apply for consent to fracture the second of two wells drilled at PNR. Cuadrilla has previously indicated that initial results from a 90-day flow test are expected in Q418. The valuation of UK shale assets remains uncertain; however, our recent analysis indicates a 67% chance of commercial success (NPV15>0), which appears to be materially higher than current market expectations suggested by the valuations of listed small/mid-caps including AJL, IGas and Egdon. Our current P50 valuation of AJL stands at A$0.86/share.
