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Sound Energy has an investment case to be heard - analyst

This week Sound Energy raised new funds for a drilling programme in Morocco

oil and gas operations
RBC has a 60p price target for Sound Energy

Sound Energy PLC (LON:SOU) has an investment story that should be heard by investors, that’s the view of RBC Capital Markets analyst Al Stanton.

With a drill programme in the calendar, slated through late 2018 and early 2019, the analyst suggested the share could be seen as cheap, relative to other oil stocks, with different emphasis.

READ: Sound Energy raises US$14.25mln as it initiates exploration programme

“Over the past year underweight SMID investors have focused on leveraged oil producers, while seeing little or no reason to evaluate the explorers; given these tendencies, gas-exploration-focused Sound Energy has drifted towards a two-year low,” Stanton said.

In terms of valuation, the analyst said the Sound Energy share price is ‘in line’ with RBC’s net asset value (NAV) model - which is pitched at 38p per share - whilst pointing out the significance of upcoming triggers.

RBC also highlighted the group’s commercialization strategy.

“Concurrent with its exploration campaign, Sound is looking to commercialise its existing, ~380Bcf, TE-5 discovery, and during the summer we anticipate an update on a potential gas sales agreement for the P90 resource of ~140Bcf, to help underpin the development,” the analyst added.

“In addition, management is negotiating vendor financing through a Build Operate Transfer (BOT) arrangement for the central processing facility and export pipeline.”

Quick facts: Sound Energy PLC

Price: 3.75 GBX

AIM:SOU
Market: AIM
Market Cap: £43.57 m
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Sound Energy entering increasingly busy period with multiple work-streams...

Proactive Investors oil and gas correspondent Jamie Ashcroft spoke to Andrew Scott as shares in the Morocco-focused gas junior Sound Energy PLC (LON:SOU) enjoyed a 25% rise this week after the company issued five stock market statements in five days. The daily communications included...

on 8/6/18

2 min read