Europa Oil & Gas (Holdings) PLC (LON:EOG) saw its shares rise on Tuesday after the explorer revealed a major upgrade to its prospective resources in the South Porcupine Basin, Atlantic Ireland, following the analysis of new 3D seismic data.
The inventory for the Frontier Exploration Licence 3/13 increases by 93% to 2.9bn potential barrels of oil equivalent.
WATCH: Europa Oil & Gas sees near doubling in resources for South Porcupine Basin licence
It highlighted that 3D seismic confirmed and verified the Beckett, Shaw and Wilde prospects, with Beckett and Shaw now seen as a fan sequence – the explorer now believes the targets are much thicker and span a much wider area than it previously thought.
Chief executive Hugh Mackay told investors that the explorer intends to bring in a partner via a new farm-out process, once its two other Porcupine areas (FEL 2/13 and FEL 1/17) have also been reviewed.
“In FEL 3/13 we are seeing the first fruits of Europa’s major investment in 3D seismic data reprocessing in Atlantic Ireland,” Mackay said. “The size of the prize in FEL 3/13 has nearly doubled from 1.5 to 2.9 billion boe. Confidence in, and definition of, the Wilde prospect has increased significantly, whilst our new understanding of the size and thickness of the Beckett-Shaw fan-system has had a transformative effect on estimated volumes.”
Mackay described Wilde as ‘the lowest-risk prospect’ while noting that Europa is confident that a drill location on Wilde will be optimised to also test the larger volumes we identified at Beckett.
finncap hikes target price
In a note to clients, analysts at finnCap hiked their target price for Europa O&G by 28% to 55p to reflect the upgrade.
They said: “The shares have lagged this year due to delays to UK onshore planning approvals and the wavelength of expected drilling Offshore Ireland. However, confidence in – and the prospective size of – its Irish offshore portfolio continues to improve.
"A stronger oil price back drop should also improve the interest levels in the farm-out process across its portfolio once this kicks off in the next few months. Patience will be rewarded.”
In mid-morning trading, Europa O&G shares were 17.7% higher at 5.0p.
-- Adds analyst comment, share price --