The outlook is bright for Hurricane Energy PLC (LON:HUR), that’s the view of stockbroker Cantor Fitzgerald, which today upgraded the offshore oil field developer.
Cantor repeated its ‘buy’ recommendation whilst increasing its target price to 87p from 80p.
READ: Hurricane Energy set for doubly busy period
At the same time, Royal Bank of Canada lifted its target price to 85p from 75p.
Both new targets suggest substantial upside to Hurricane’s current price – which after a 4.3p or 8% rise, stood at 58.22p.
It comes a day after Hurricane announced a deal to sell 50% of a pair of West of Shetland oil projects, collectively known as the Greater Warwick Area (GWA), in return for commitments to spend US$387mln on new wells and an initial development through to first production.
“This early development would see near term production of c10,000 bopd and unlock reserves of 20mln barrels, whilst also paving the way to a larger development of 500mln barrels,” Cantor analyst Jack Allardyce said in a note.
The analyst added: “The GWA development would run concurrently alongside the wider development of the Greater Lancaster Area (GLA), thereby accelerating production and reserve growth, and is an endorsement of the strategy to monetise Hurricane’s multi-bn bbl portfolio.
“Furthermore, the additional production revenue would help fund the GLA development, and reduce the requirement for further equity/debt funding.”
According to Allardyce, the transaction is “transformational” because it demonstrates the attractiveness of Hurricane’s basement play, providing a clear pathway to grow production and reserves.
“With no funding concerns, and first production in H1 2019, the near term outlook is bright,” he added.