Caspian Sunrise Plc (LON:CASP) is poised for extraordinary value creation, so says stockbroker WH Ireland, following the Kazakhstan focussed oil and gas junior’s latest update which gave details from the 808 exploration well and on the group’s proposed merger.
808 is deemed to be a high impact well for Caspian and the company told investors that preliminary indications suggest four of six targets warrant testing – which could get underway imminently.
Caspian added that there will be two further wells later this year, if testing confirms the presence of a significant quantity of oil.
The company also updated on the A6 well where it has previously perforated the top 60 metres of 100 metres gross reservoir. It said that limited recoveries have been possible from the well to date, and it is being prepared for a chemical wash in order to stimulate flows.
The 808 and A6 wells are located within the BNG contract area, in the west of Kazakhstan, where the company is partnered with Baverstock GmbH.
It is in the process of merging Baverstock, with the partner being issued equity amounting to 41.59% of the enlarged company. In addition, a new US$10mln capitalisation from Vertom International, a vehicle of Caspian chief executive Kuat Oraziman will support the group’s plans.
Caspian expects to receive approvals to complete the capitalisation by the end of the second quarter.
In a note on Monday, WH Ireland analyst Brendan Long highlighted that formal approval from the Kazakh authorities is the only outstanding material condition of the proposed merger.
Long also notes that success with the 808 prospect could equate to 10p per share in the Caspian Sunrise share price, though he doesn’t yet include anything for it in his ‘buy’ recommendation and 23.3p price target for the AIM quoted stock.
The analyst’s target suggests some 150% upside to the current price of 9.29p.
“Caspian Sunrise is poised for extraordinary value creation pending near-term developments at the MJF shallow field, shallow exploration well 808, deep well A5 and deep well A6,” he said.