Aminex plc (LON:AEX) and Solo Oil PLC (LON:SOLO) on Wednesday morning revealed what were described as ‘significant’ results from the recently drilling Ntorya-2 well in Tanzania.
The well yielded gas flows of 2,833 barrels oil equivalent per day, albeit the test flows were impeded by technical problems triggered by strong gas inflows into the well during drilling (which meant the operation had to be adapted).
Both shares enjoyed a stellar run in the months leading up to the result, and both were on the back foot – down about 20% at one point – after Wednesday’s announcements.
Here, we take a closer look at what City analyst have to say about the supposed ‘significant’ well result.
Shore Capital highlights ‘impressive’ Ntorya-2 results
Craig Howie, analyst at Shore Capital, house broker to Aminex, said: “this, in our view, is an extremely satisfactory result from Ntorya-2, which has significantly exceeded pre-drill expectations and (combined with the Ntorya-1 discovery well and mapped seismic features) clearly indicates a commercially significant volume of gas-in-place.
“Aminex is now updating its basin model to determine optimum drilling depths for Ntorya-3 and future development wells, and will complete a full analysis of all technical data prior to applying for a 25 year development licence.
“Post-analysis, we also anticipate a revised interpretation of in-place volumes.
“We will now update our Risked NAV calculation for Aminex, which has seen a strong share price performance but whose valuation remains very solidly underpinned, in our opinion, following the impressive results achieved from the Ntorya-2 well and ahead of further progress at Ruvuma.”
Davy says it’s a ‘very good’ result
Job Langbroek, analyst at Dublin based Davy, in a note said: “The well test result from the Ntorya-2 well points to a significant accumulation of gas in the target.
“This is positive for Aminex, but the market may look for confirmation of the scale of the discovery to move the stock ahead after the very significant gains of recent weeks.”
MGW reckons Aminex shares should ‘go better again’
Independent expert, Malcolm Graham Wood in his daily oil market blog said: “Aminex has confirmed that Ntorya-2 has successfully tested and has a 51m gas reservoir interval with a stable flow rate of 17 mmcfd which is astonishingly good.
“A newcomer to the bucket list AEX should go better again and if Jay ever comes down from the ceiling I hope to get an interview with him…”
WH Ireland questions recent run-up in value
Analyst Brendan Long, in a note, said: “In our opinion, this is a great test result, however the market adding ~£150M to Aminex’s market cap since the well result on 6-Feb is remarkable in a context where the gas demand outlook for gas in Tanzania is looking potentially mooted.”
SP Angel says it’s a ‘solid statement’, flags possibility of a new funding
SP Angel analyst Zac Phillips, in a note, says today’s results represent a ‘solid statement’ on Ntorya’s wider potential.
“Make no issue, the strength of the news (well pressure and subsequent control asserted), whatever the outcome of the drilling result the increase in value will be significant,” he said.
“What the company can legitimately do now is undertake a wider fundraising, but specifically not the selective fundraising that it undertook last year.
“That way, the company will have enough resources to select the best option for the company, not just the ones that are open to it given the limited resources at its disposal.”