The current share price represents an attractive entry point for would-be investors in Sound Energy (
LON:SOU), the gas exploration company focused on Morocco and Italy.
The shares, down 5% at 68p in morning trade, are worth 103p, according to the Cantor number cruncher.
Wahab’s call on the stock followed an update on drilling plans and publication of its first internal estimates of the scale of its Tendrara gas asset in Morocco.
“We believe that Sound has sufficiently grown its acreage position to become a material player in Mediterranean gas,” the analyst said in a note to clients.
“The company is benefitting from attractive and robust pricing fundamentals which have served to boost project economics.
“With a number of event driven catalysts on the horizon, supported by a robust financial position, and now a funded 2017 drilling campaign, we see Sound’s current share price as representing a compelling entry point for investors.”
For finnCap’s Dougie Youngson, who rates Sound a ‘buy’ up to 87p, one of the major potential ‘dial movers’ is the results from extended well test on latest well at Tendrara.
“The purpose of this is to confirm the sustainability of the initial flow tests seen during the current work programme,” he said.
The latest from Sound
Earlier, Sound provided some guidance on the potential scale of Tendrara licence.
Currently, the Sound team reckon there is between 300bn and 500bn cubic feet of gas in place based on the work carried out to date.
The next well, a step out some 12 kilometres from the last hole, will test the lateral extent of the gas accumulation.
If it successfully finds gas at commercial rates via TE-8, then the estimate for Tendrara rises to up to 1.5 trillion cubic feet in place.
In a release to the stock exchange, Sound provided an update on the next well, where work is slated to start in February.
It will test the TAGI reservoir as well as tapping for the first time the lower lying Palaeozoic horizons.
Sound also confirmed it had retrieved memory gauges from its last hole, TE-7, that confirm “the reservoir pressure correlates with the gas gradient recorded at all previous wells on the structure”.