BowLeven shares broadly unmoved by Sapele-1 exploration well disappointment
BowLeven’s (LON:BLVN) announcement that the Sapele-1 exploration well in the Douala Basin, offshore Cameroon, was halted due to technical problems only saw a neutral reaction by the market and brokers this morning.
While the stock initially reacted with a slight fall, by late morning it was trading just above the opening level at 358 pence.
The company said Sapele-1 was drilled to a total depth of 4,733 metres. Work was halted due to technical limitations after encountering a high pressure gas reservoir in the Cretaceous. The bottom hole section has been cemented and is now being abandoned in advance of planned appraisal drilling.
In its ‘First Take’ report prior to the market open, Evolution Securities said the failure of the Sapele-1 well to make an outright discovery in the Cretaceous will probably see the shares come off this morning.
“However, the forward plan of appraising the Tertiary discoveries already announced, in what are likely to be in more optimal locations, and the addition of an extra drilling rig from February onwards makes the BowLeven story an attractive one in our view.
“The shares have weakened from 400p earlier this year but we think there will be additional weakness today. We would look to pick them up though around the 320p mark,” Evolution said.
Investment bank Matrix called the news an “overall neutral announcement”.
“After an extended gap since the last announcement, it is hardly surprising to find that the well has encountered some difficulties. It is encouraging (though not really conclusive) that oil has now been interpreted in the shallower Epsilon, but disappointing that the all important Tertiary testing will have to wait for another well. Still, with two rigs operating in the area and the Tertiary and Cretaceous potential now identified, but only just scratched, we maintain our BUY rating,” it said.
Matrix has a 450p target on the stock.