City analyst Dougie Youngson is expecting a less speculative time for Hurricane Energy Plc (LON:HUR), as he reckons drilling plans are now on the back-burner.
Hurricane last week landed just over half a billion dollars to fund the Lancaster field development through to first oil, via an ‘early production system’ that’s targeted to come online in the first half of 2019.
A final investment decision is due soon, and much of the attention is now on corporate and desk-top work.
Meanwhile, a partnership deal with a major oil company is still seen as a possibility, because a farm-out process is ongoing, and a larger partner would support the big, longer term development at Lancaster.
Youngson, analyst for City firm finnCap, in a note, told investors that there may be a lack of catalysts now that drilling and funding news is in the rear view.
Highlighting management comments from an analyst’s call, he explained: “the company stated that a farm-out could take a year to negotiate and close.
“Multiple options are being considered, one of which could include further appraisal ahead of the EPS coming onstream.
Youngson added: “We note that until a farm-out is secured we will not see any further drilling activity on the licences.
“Drilling has been the key share price catalyst for Hurricane over the past year, and the largely administrative process ahead of the construction of the EPS may not result in significant gains in the share price.”
finnCap on Wednesday reduced its Hurricane Energy target price to 80p from 130p, to account for the dilution created by last week’s equity raise, nonetheless, the broker repeated a ‘buy’ recommendation.
The new target price represents some 130% upside to Hurricane’s current price of 33.75p.