leadf
logo-loader
viewSound Energy PLC

Sound Energy shares have further to rise - broker

The stock, currently changing hands for 73p, would have to rise a further 38% to reach Cantor Fitzgerald’s valuation.

BP_north_american_gas_opt.jpg
Tapping into gas: Morocco could be the making of Sound.

A leading small-cap broker has repeated its ‘buy’ and 101p a share price target on Sound Energy PLC (LON:SOU), which Monday said it had made progress expanding its footprint in Morocco.

The stock, currently changing hands for 73p, would have to rise a further 38% to reach Cantor Fitzgerald’s valuation. It is up 300% in the year to date.

Analyst Sam Wahab repeated his positive call on stock on the Mediterranean gas explorer following an update on Sidi Moktar licence.

Earlier Sound said it is now officially the new owner of a 75% interest in the Sidi Moktar licences after receiving regulatory approval to take control of the assets from the Moroccan authorities.

WATCH: Why Sound has star potential 

READ: Today's announcment in full

It acquired its holding from PetroMaroc Corporation and Maghreb Petroleum Exploration in return for 43mln shares in Sound worth £31.5mln.

Remember Sound receives 50% of the proceeds from the sale of equity over above 50p a share, which is around £5mln at Friday’s share price. It will be added to the cash it raised from November’s successful £26mln share placing.

Covering 2,700 square-kilometres in the Essaouira basin, in the centre of the country, Sidi Moktar contains a “material” existing gas discovery, where two wells have already been drilled, and “significant” exploration potential.

“Whilst expected, this is an encouraging update for the company in our view as Sound builds out its Moroccan portfolio following transformational success at Tendrara this year,” said  

Tendrara, also in Morocco, has been the site of two successful wells that has, according to some experts, the potential to be a globally significant gas field. Success with the drill bit has propelled the shares 300% higher in the year to date.

Don’t forget Italy

Badile, which has a net present value of over £400mln, is part of a portfolio of Italian assets on which the original Sound Oil was founded.

It includes smaller producing assets Casa Tiberi and Rapagnano as well as a host of exploration and appraisal opportunities that could help turn the valuation dial.

Recently Sound expanded its collaboration with oil service giant Schlumberger from Morocco to Italy with the latter helping fund Badile after agreeing to provide €7.5mln of drilling services.

Top partnership

It stands to receive 20% of the profits from a successful well for effectively stumping up 30% of the costs.

The collaboration started with Schlumberger footing a significant portion of the bill for the Tendara appraisal well.

And as CEO Parsons pointed out the partnership “remains a critical differentiator for our company which technically de-risks and funds our key asset”.

Quick facts: Sound Energy PLC

Price: 1.461 GBX

AIM:SOU
Market: AIM
Market Cap: £19.38 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Lithium Australia divests Emu Lake gold-nickel prospect to Metal Hawk

Lithium Australia NL (ASX:LIT) managing director Adrian Griffin speaks to Proactive about progress with its collaborative exploration management strategy. This includes divestment of the Emu Lake gold-nickel prospective tenement north of Kalgoorlie to Metal Hawk Ltd. Griffin says Metal...

5 hours, 2 minutes ago

3 min read