Shares in Tower Resources (LON:TRP) could be worth twice the current price, according to broker GMP Securities.
The broker today issued a note with a ‘speculative buy’ recommendation and a 0.40p price target (the current price is 0.19p).
It comes after the Africa focussed oil junior raised £5.2mln in a share placing last week in order to fund a new project in Cameroon, as well as pursue potential opportunities in Nambia.
M&G Investments is a cornerstone participant in the placing, subscribing for £2.3mln of new shares and acquiring 18% of the group’s enlarged share capital. Directors and other Tower staff members have also participated.
The Thali Block, the new Cameroon asset, is located in shallow water in a proven sub-basin and has known oil and gas discoveries, as well as identified exploration opportunities.
“Tower’s entry into the Thali block offshore Cameroon will be the first illustration of the shift in its strategy from focusing only on frontier basins to now also exploring in a proven hydrocarbon basin,” GMP analyst Ritesh Gaggar said in a note.
“The block is part of the Rio Del Rey basin, an extension of the prolific Niger Delta.
“We believe the shallow-water block, containing two discoveries, provides Tower a low-cost entry to a prolific region with material exploration upside potential.”
“We believe the attractiveness of the block is the low threshold requirement of 20mmbbl discovery in order to make a project economic at $60/bbl.”
In a statement last week Tower chief executive Graeme Thomson said the acquisition would mark the start of the company’s transition towards lower risk proven basins, rather than high risk exploration frontiers.