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Columbus Energy tipped to rise significantly - broker

Published: 12:03 13 Dec 2017 GMT

onshore drilling operation
Disciplined production growth plans are central to VSA’s bullish point of view.

Columbus Energy Resources PLC (LON:CERP) shares have been tipped to rise 380% as the recently relaunched oiler advances its assets in Trinidad.

Stockbroker VSA Capital has initiated its coverage of the stock with a ‘buy’ recommendation and set a target price of 26p, versus Wednesday’s opening share price of 5.48p.

Analyst Oliver O’Donnell highlighted that since the appointment of new boss Leo Koot and the group’s rebranding (from LGO Energy) the AIM-quoted share has increased by 165%, but, nonetheless, sees the price going much higher still.

The company’s disciplined production growth plans are central to VSA’s bullish point of view.

“Columbus dropped the capitally intensive infill drilling programme at the onshore Goudron field in June 2017 and following the receipt of a Certificate of Environmental Compliance began a programme of well optimisations and well stimulations,” O’Donnell added.

“In H1 2017 production average 353bopd, however, following successful initial results CERP is now targeting 550bopd by year end and average 900bopd through 2018.

“This approach requires minimal capital. Consequently we expect strong cash flow generation as production grows.”

The analyst also sees catalysts in the South West Peninsula project, which is described as a “highly attractive opportunity”.

O’Donnell added: “With a stronger balance sheet and return to positive cash flow expected we now anticipate a first exploration well, funded by internally available funds, to be commenced in H2 2018 which will likely significantly de-risk the project thereby unlocking potentially transformational value for Columbus.”

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