Canadian Overseas Petroleum (LON:COPL, CVE:XOP) could find out as soon as late 2016 or early 2017 whether their share price is going to explode following a likely historic drilling off Liberia, according to analysts at Edison on Tuesday.
The London- and Toronto-listed oil exploration group has teamed up with partner ExxonMobil (NYSE:XOM) to drill the Mesurado-1 prospect offshore Liberia.
ExxonMobil owns 83% of the project and COPL the remaining 17%. In addition to recent success across the Atlantic, Mesurado-1 is partly de-risked by offset wells on block LB-12 (Carmine-Deep and Goshtern-1) and block LB-15 oil discovery (Montserrado-1).
The significance of Mesurado-1 is, as Edison dubbed it, that it is like “looking for Liza’s conjugate twin sister”.
“After recent appraisal, ExxonMobil believes that the Liza oil discovery offshore Guyana could hold up to 1.4bnboe, making it one of the largest oil discoveries since the start of the decade. ExxonMobil is to looking to replicate this success by targeting a possible Liza Atlantic conjugate, Mesurado-1 offshore Liberia,” Edison said in a note.
The analyst said that for COPL success could prove to be game-changing.
COPL is funded through the upcoming Liberia exploration programme operated by ExxonMobil up to a maximum gross carry of $120mln.
“We expect this to include drilling of the Mesurado-1 prospect, which we estimate at a P50 prospective resource of c 400mmbbl and geological chance of success (GCoS) of 30% (commercial chance of success 19.5%),” Edison added.
“We see few small-cap E&Ps that offer a funded exploration programme targeting over 400mmbbl of prospective resource over the next 12 months. We value COPL on the basis of a post-discovery farm-down, driving a C$0.15/share RENAV, and also provide a potential strategic asset valuation of C$0.22/share.”
COPL shares were unchanged at C$0.08 on Tuesday.