Clarity on drilling plans will be welcome for investors in Eco (Atlantic) Oil & Gas Ltd, that’s according to analysts at Berenberg who have repeated a ‘buy’ recommendation that potentially sees the explorer’s shares soar in value.
The European bank’s note follows Eco’s financial results released on Friday, in which the AIM-quoted firm emphasised significant strides made during its financial year. Meanwhile, news of joint venture exploration drilling plans for the Orinduik project area is keenly anticipated.
“The company indicates that all seismic reprocessing has now been completed and the Orinduik Block partners (Eco has a 15% stake) are now in the process of high-grading multiple identified prospects,” Berenberg analyst James Carmichael said in a note. “At least one exploration well is expected on the block in 2022, with targets in the Cretaceous expected to be selected and confirmed in Q3 2021.”
Berenberg has a 125p price target, versus Eco’s prevailing market price of 24.53p.
armichael added: “In its FY21 results, Eco Atlantic highlighted cash and equivalents of cUS$13m, and therefore continues to provide fully funded exposure to potentially transformational near-term exploration. In addition, the company is working to establish a material portfolio of low-risk renewable energy assets with attractive returns and has provided more clarity on the strong management team.”
“We make minor adjustments to our forecasts and continue to expect material upside in the event of exploration success.”
The Orinduik project is operated by Tullow Oil alongside partner Total.