Long, in a note, highlights the success of the current drilling to date and the potential that the company can add more value in the field.
“Roxi’s MJF structure has delivered exceptionally high production results and the well locations have increased the scale of that resource such that it now contributes 9.5p/sh to our target price based on our 10.5 mmb net recoverable resource assessment.
“The company is currently drilling a look alike prospect, North Yelemes with Well 808.”
According to Long, the next prospect could potentially be worth 10.5p per share to Roxi, while the ‘full upside case’ sees a further 10.p per share to his valuation.
An initial well result for North Yelemans could come before then end of the first quarter, Long says, and production testing could take place after that during the second quarter.
The two projects present “potentially transformative catalysts”, he says.
“Roxi’s current valuation, based on our estimates, is weighted equally between its deep and shallow assets,” Long added.
“Drilling success at Well 808 stands to materially tip the balance by creating additional value in the company’s shallow asset base. The MJF structure and if successful the North Yelemes structure each have the scales to independently form the basis of a successful oil & gas growth company.”
Presently, WH Ireland rates Roxi as a ‘buy’ and it has a price target of 23.3p (current share price: 9.69p) – and that excludes most of the 30.1p per share ‘additional upside potential’ identified by Brendan Long.