Arden Partners has a ‘buy’ recommendation for North Sea exploration junior Jersey Oil & Gas Plc (LON:JOG) ahead of a summer well.
The well, which will test the 113mln barrel Verbier prospect, will be funded by partner Statoil and Jersey retains an 18% stake in the asset.
It is seen by Arden as one of two key catalysts that can take Jersey’s shares higher.
Arden reckons Verbier is worth 132p (risked net asset value) per share, or 877p unrisked, although it is deemed to be a ‘high risk route to value’ over the next six to nine months.
The other possible catalyst relates to the group’s acquisitive ambitions.
“In addition to P2170 drilling, JOG’s core strategy is to build a 10mbbl/d UK North Sea production portfolio via the acquisition of between six and ten field interests containing 15mmboe-20mmboe of 2P,” Arden analyst Daniel Slater said in a note.
“This is intended to create value via opportunistic deal making, while also exposing the company to oil price upside on further sector recovery.”
Slater adds: “JOG has the potential to generate catalysts in the coming months as it approaches P2170 drilling – recent share price performance indicates that the market is already reacting to this potential.
“Longer term the acquisition strategy could turn JOG into a significant new E&P company.”
On Thursday shares in Jersey Oil & Gas rose 10.5p, 7.8%, to trade at 144p each.