Cairn Energy PLC’s (LON:CNE) assets in Senegal offer the most scope to deliver value upside, according to Deutsche Bank, though analysts say there are no shortcuts.
Drilling starts on the first well in the next programme, SNE-5, in late January and drilling on the SNE-6 will follow on after that.
The programme aims to appraise the group’s major SNE discovery, testing the reservoir on the southern flank of the field.
Results from the wells are anticipated by mid-2017, and exploration work is slated for the second half of 2017.
As a whole the campaign could deliver a number of value catalysts.
Deutsche analyst David Mirzai, meanwhile, highlighted that more improvement is needed in the market as well.
“We think that Senegal offers the most scope to deliver value upside, both through cost reduction and resource additions from its multi-well drilling campaign,” the analyst said in a note.
“However, the current upstream environment offers no shortcuts to value realisation and we think investors must wait for activity to pick up in the A&D market to see the stock re-rate.”
Cairn Energy is rated as ‘hold’ by Deutsche, and the bank has a 270p price target (current price: 240p).