Credit Suisse has reiterated its ‘outperform’ rating and 930p target price for Africa-focused oil & gas group Ophir Energy, highlighting the firm’s improving asset base in Gabon and Tanzania.
‘Bottom line: current discoveries largely underpin the current share price with little risked exploration priced in,’ the broker said on Monday morning.
‘Ophir’s asset base is improving following further data acquisition since the CMD in late 2012; a company that is a top five holder of deepwater acreage in Africa with high equity stakes across its portfolio making each well a high impact play.’
In Gabon, Credit Suisse said that prospects have ‘encouragingly held up’ in recent surveys and Ophir is expected to provide updated estimates in the near term which could improve the chance of success (CoS) to 20-25%.
Meanwhile, in Tanzania Blocks 1 and 7, the CoSs should also rise as the company receives new data.
Regarding funding, the broker said it is still awaiting an update on the farm-out for part of East Africa and Equatorial Guinea.
‘We are less concerned around this; if doing a placing now means getting better farm-out terms eventually (ie strengthening its bargaining position), it would ultimately set it in a more solid financial position for longer.’
Shares were up 1.48% at 484.05p by 09:54 on Monday.