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.
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.
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”.