Sound Energy PLC (LON:SOU) shares advanced more than 11% on Monday after results from a new well at the Tendrara project, onshore Morocco, were revealed to be above company expectations.
A significant stable flow of gas has been achieved from just 18% of the reservoir interval, and no stimulation has thus far been performed by Sound Energy.
"I am absolutely delighted to report what appears to be an early and potentially very material success at the first of our three strategic plays,” said James Parsons, Sound Energy chief executive.
So far the company has perforated 5 metres of gas pay, and has measured a stable flow rate of 1.36mln cubic feet per day.
Last week, Sound Energy announced that the new well had been drilled to a depth of 2,665 metres and that 28 metres of net gas pay had been encountered.
Further results from the well are expected later this month, Sound Energy told investors.
Parsons added: “We eagerly await the post stimulation flow rate but I believe the early results of this first well already both prove a material commercial rate at Tendrara and provide significant early clues as to the regional potential of the Eastern Morocco TAGI reservoir."
Sam Wahab, analyst at broker Cantor Fitzgerald described it as “another encouraging development” for Sound Energy, whilst he repeated a ‘buy’ recommendation.
“The company’s shares have rallied in recent weeks as the market continues to recognise the successful execution of Sound’s Mediterranean gas strategy, but we believe its current valuation remains undemanding,” Wahab said in a note.
With a 40p price target Cantor’s bullish recommendation sees more than 40% upside to the current share price of 27p.
--UPDATED to add broker comment and share price details--