Tower Resources PLC (AIM:TRP) shares can be worth triple the current market price, that’s according to stockbroker SP Angel which today initiated its coverage of the energy transition firm with a ‘Speculative Buy’ rating.
It comes as Tower counts down and prepares its drill plans for what SP Angel describes as an attractive fast-track oil development opportunity and exploration upside.
The broker’s bullish recommendation comes with a 12-month target price of 0.12p, more than 300% higher than the current price of around 0.03p.
Securing a rig contract for the drilling of the hotly anticipated NJOM-3 appraisal well will be a key catalyst for the AIM-quoted explorer’s shares. Moreover, SP Angel noted that the market may be conducive to this breakthrough.
“The company believes there is improved flexibility and availability in the jack-up market to contract a rig to drill the key NJOM-3 appraisal well on the crest of the Njonji discovery, which on success should unlock a commercial development,” SP Angel analyst David Mirzai.
“We think that signing a rig contract for the NJOM-3 well will also prompt a farm-in partner to come into the licence and complete the required financing for the well.”
Mirzai added: “Following a successful farm-out process leading to positive results from the NJOM-3 appraisal well in mid-2024, investors could then look beyond our target price towards a higher risked valuation of the wider portfolio.”
Tower, in late September, told investors that talks for a rig contract are “currently at a very advanced stage of negotiations”, and it expected an agreement would be “concluded soon”.
Chief executive Jeremy Asher, at that time, described as “the critical next step” in finalising the timing of the well”.
“The rig contract will still leave a wide operational tolerance for the well spud date, based on the timing of the current operations which the rig is undertaking, but it will be a firm commitment between the rig owner and the company,” Asher said.
He added: “we are still hoping to be able to spud the well in the first half of 2024.”