Cantor Fitzgerald has kept its ‘buy’ rating on 88 Energy Limited (LON:88E) despite chopping back its target price to 2.7p from 4.4p in the wake of a disappointing final report on the Winx-1 well in Alaska.
In a note to clients, analysts at the City broker pointed out that analysis of the wireline logging programme for Winx-1 has indicated low oil saturations in the primary Nanushuk topset targets, and testing/sampling indicates that reservoir quality and fluid mobility is insufficient to warrant testing at this location.
They noted that the secondary Torok target also exhibited low saturations and failed to flow, so the well will now be plugged and abandoned, with the data gained to be integrated with reprocessed 3D over the Western Leases to evaluate the remaining prospectivity.
The Cantor analysts said: “While a disappointing result after promising early signs during drilling, we would note that Winx only represented c16% and c5% of the net resource base across our RENAV and 88E’s wider portfolio.”
They added: “Focus will now shift to the proposed farm-out of the Icewine conventional portfolio, where a deal is targeted this quarter.”
The analysts said their target price cut reflects the removal of Winx from its valuation for 88 Energy.
However, with 88 Energy shares trading at 0.85p, down 35.8% on Tuesday’s close, Cantor repeated its ‘buy’ stance on the stock.