Cavendish sees huge upside (more than thirteenfold) for 88 Energy Ltd (AIM:88E, ASX:88E, OTCQB:EEENF, FRA:POQ), with the bullish house-broker highlighting that the explorer has reshaped its Namibia farm-in agreement.
This, it says, will strip out $15 million of anticipated funding exposure while retaining a 20% stake in frontier acreage.
The broker reiterated its 'buy' rating and 19.8p target price on the AIM-listed company, implying 1,366% upside from a 1.4p share price.
Cavendish said the amended agreement with joint venture partner and operator Monitor Exploration was “a positive outcome for 88E’s shareholders”, confirming the company’s 20% working interest in PEL 93 as fully earned and unconditional.
The revised terms remove staged earn-in obligations, reassignment risk and future funding commitments, while preserving exposure to the licence’s exploration upside and allowing 88 Energy to keep its focus on core Alaskan assets.
The broker also pointed to improving subsurface evidence in Namibia, saying recent airborne gravity, magnetic and radiometric survey work had strengthened prospect definition and confirmed Lead 9 as a strong future drilling candidate.
“Results of the recent aero gravity survey have improved the subsurface understanding of PEL 93, strengthening prospect definition, de-risking key structural uncertainties and confirming Lead 9 as a strong drilling candidate,” Cavendish said.
A further near-term catalyst could come from nearby activity by ReconAfrica, where testing of the Kavango West-1X discovery well is expected to assess around 420 metres of hydrocarbon-saturated section across six zones.
Cavendish said success there would represent a potential basin-opening result and provide important regional read-through for PEL 93.