VSA Morning Flow Test, 31/03/20
Columbus Energy Resources (LON:CERP)
Columbus Energy Resources (CERP LN) has announced that it has agreed a short extension to the term of the Goudron Incremental Production Agreement Service Contract (IPSC). The contract had been due to expire on 31 March 2020 however the agreement with the state-owned Heritage Petroleum Company Limited is extended until 3 April 2020 to provide further time to complete the formal agreement for a longer-term extension.
The Goudron oil field situated between the East Moruga and Beach Marcelle fields on Trinidad is a core area of CERP’s currently producing assets. We believe that the field technically has significantly higher production potential through techniques such as waterflood; favourable updated terms in the IPSC could potentially enhance the economic potential to CERP although we await the final details of the long term extension.
We reiterate our Buy recommendation and target price of 21.6p/sh.