Broker snap: Plenty of upside left at Nighthawk

Oil explorer Nighthawk Energy has announced the results of its strategic review and it did not take long for the market to look at the size of the write-downs the company announced and slice around a fifth of the value from the company's share price.Resource sector specialist Westhouse Securities remains an advocate of the stock, however, and supports the company's decision to focus exclusively on its Jolly Ranch asset. "While the write down of non-core assets is regrettable, the group's exit from these activities and the renewed primary focus on Jolly Ranch is welcome, given the tremendous upside the project represents. This was demonstrated in 2009, when Schlumberger reported that P50 [proved + probable] oil in place was 1.462bn barrels gross, over c246,000 acres. The project is now over 410,000 acres," the investment house said.Monday's announcement has resulted in Westhouse taking a scythe to its price target for Nighthawk, however. The new target price is 37p, down from 88p previously."This new target reflects a modest $5m valuation for Revere/Cisco Springs and a reduced value associated with Jolly Ranch to reflect its early stage of development. However, given that the shares are trading at around 11p this morning, we are retaining our BUY recommendation," Westhouse concluded.