Stockbroker WH Ireland today upgraded its targets for Jersey Oil and Gas PLC (LON:JOG) following an independent consultant last week lifted estimates for the Verbier exploration prospect.
Verbier will be drilled by project operator Statoil this summer and it is seen as a key share price catalyst for Jersey.
The prospect was upgraded last week with ERC Equipoise now estimating to host some 162mln barrels of oil equivalent resources, up from a prior estimate of 118mln barrels. Perhaps significantly, the chance of success for the upcoming well was also upgraded - to 29% from 26%.
Additionally, the resource potential of another prospect, Cortina, also increased - to 124mln barrels from 91mln - and the chance of success was set at 19%.
WH Ireland analyst Brendan Long set a new target price of 378p, suggesting about 22% upside to the Jersey target price, and repeated a ‘buy’ recommendation.
“We have reflected the increased estimate of prospective resource and applied the slightly higher chance of geological success,” the analyst said.
“Perhaps most importantly, the value per barrel has increased materially with scale to $7.88/boe from $6.60/boe because the relevant capex and opex costs are essentially fixed.”
He highlighted that a rig contract signing would be the next catalyst, which he says would add another 10% to his target as it would remove any remaining material risk to the drill programme going ahead.