Brazil-focused Alvopetro Energy Ltd (CVE:ALV) is making strong progress at its Caburé field that isn’t reflected in its stock price according to analyst at Mackie Research.
Alvopetro holds and operates 13 exploration block and two mature oil fields located onshore Brazil.
The oiler recently drilled an appraisal well to assess the Caruacas reservoir at Caburé which encountered 31 metres of potential natural gas pay.
That’s less than the 78m of net pay in the discovery well, although as Mackie analyst Bill Newman explains: “Less gas pay was expected as the 198(A1) well was drilled down dip from the 197(2) discovery well.”
Newman is expecting Alvopetro to start work on a production test on the 198(A1) well at some point this month, while it is also working on securing a natural gas sales contract which could lead to the commercialisation of the field.
With the company putting in the hard graft to press ahead with that, Newman believes the market has failed to price in the potential of Carubé.
“Alvopetro is working diligently to unitize the Caburé discovery and to secure a natural gas sales agreement that will put the company on a path to monetization a significant conventional resource that is not currently recognized in the stock price,” Newman said in a note.
Newman sees the stock as a ‘speculative buy’ with a price target of C$0.60. That leaves enough white space for the stock to more than double from its current price of US$0.26.