(Sharecast News) - Analysts at Berenberg reiterated their 'buy' recommendation and 100.0p target price for shares of Hurricane Energy following the latest update from the company on its Lancaster Early Production Scheme, but cautioned that it was still "early days" and that more data was needed in order to better understand the resource potential of the reservoir.
Sustained production for six to 12 months was needed and perhaps also more wells drilled across its assets in order to better understand the reservoir.
Nonetheless, analysts Ilkin Karimli and Jason Turner conceded that output from the EPS was averaging "significantly" higher rates than they had anticipated and that aquifer water was not encountered in the reservoir.
"While the data collected so far is encouraging, it is still early days. Hurricane is pioneering fractured basement plays in the UK and as such will require more data to better understand the resource potential," they said.
"We therefore believe it is too early to derisk a full-field development potential at Lancaster and keep our risk factors unchanged in the NAV."
In terms of valuation, the Lancaster EPS, net of financials, was responsible for the firm's core net asset value, with a full-field development of the Lancaster and Greater Warwick Area fields offering contingent upside.
30 Jun 2021 10:21
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