Morocco and Australia-focused Tangiers Petroleum (LON:TPET, ASX:TPT) is in the right place at the right time according to broker Peel Hunt, which has kicked off coverage with a buy note and 55p target.
In particular, Peel Hunt sees the Moroccan acreage as a likely short-term value driver given recent farm-ins by Cairn Energy and Genel Energy into adjacent licences. As well as underlining the area as prospective for hydrocarbons, thier interest also provides high quality industry endorsement,
Tangiers has a 75% operated interest in the 15,000 sq km offshore Tarfaya permit and is in a good position to conclude a farm-out on attractive terms, the broker said.
The Tarfaya permit contains eight under-explored licences that together are around one-third the size of the UK Southern North Sea. With an oil discovery nearby, hydrocarbon shows in a number of wells and an oil shale mine onshore, the permit is definitively located on top of an active, working petroleum system, said Peel Hunt.
A number of prospects have been mapped that cover two separate geological periods (Jurassic and Cretaceous) and the Jurassic prospects alone have a combined P50 unrisked prospective resource of 867MMbbls.
Although currently not as high profile as the Moroccan acreage, Peel Hunt considers the Australian licences to be equally as prospective from a geological standpoint. A farm-out process is also under way and a deal could be concluded in the first half of 2013.
On a risked adjusted estimate of the exploration upside, Peel Hunt has come up with a value of £569m or 332p/share, but due to timing uncertainty and various exploration risks the target price is a heavily discounted 55p/share.
Shares are currently 23.05p.