The stockbroker rates Rose as a ‘buy’ and has a price target of 9p, suggesting some 268% upside to the oiler’s current price of 2.68p.
“Rose aims to commence low-risk appraisal work at its Gunnison Valley Unit (GVU) in Utah’s Paradox Basin later this year,” Cantor analyst Ashley Kelty said in a note.
“The planned appraisal well on the GVU later in 2018 is targeting the Clastic 21 interval - one which has been productive nearby.”
Kelty highlighted the findings of a recent third-party assessment – competent persons report (CPR) – which defined a 13mln barrel resource whilst detailing the potential of multiple stacked intervals which he said could increase resource volumes further if GVU drilling proves successful.
“We see this well as being relatively low risk, and would de-risk the multiple additional prospects and leads across the leases held, and offer significant follow-on exploration potential for the company,” the analyst added.
On Tuesday, Rose’s interim results statement highlighted continued progress toward its goal of starting the well programme before the end of 2018.
Rose emphasised that its current activity in the Paradox basin remains the ‘absolute priority’, though noted other new opportunities.
Chief executive Matthew Idiens described as the first half of 2018 as a “period of intense activity”.
Looking ahead, Cantor’s Ashley Kelty added: “Drilling success could unlock a transformational development and lead to de-risking of the near-field upside.
“With a wider prospective resource base being in excess of 1.5bn boe, we feel that the market discount should unwind as investors appreciate the scale of the potential in this exciting new play.”