news19 Jun 2015 13:45
Amedeo Resources (LON:AMED) is approaching a key milestone in the coming months as it prepares to deliver its first oil drilling rig. Operationally, important progress continues towards the completion of Explorer 1, a mobile jack-up rig, which will be completed by the second half of this year. The vessel was launched into the water this April ahead of its full completion and the remaining 9 sections for each leg will be completely installed by Mid June 2015.
John Cummins, analyst at WH Ireland, said the Explorer 1 completion is very much the focus for investors in the short-term. The analyst, who has set a ‘speculative buy’ recommendation for Amedeo, believes there could be much more to come from the young oil engineering services group even though the market is currently tough. At 0.75p per share WH Ireland’s twelve-month price target suggests some 180% upside to the current price of 0.32p.
That said, Cummings notes that it is a challenge to set a ‘fair value’ for the early stage company and there could be scope to raise the bar further in due course. “The potential for the group is significant given the backing provided by operating partners, majority shareholder and track record of management. Amedeo is both well backed, with Qatar’s state investment authority owning 61% of the shares, and at the same time it is partnered with Yangzijiang Shipbuilding (YZJ), a shipbuilder worth US$4bn. With Yangzijiang Shipbuilding, Amedeo has a 19% stake in YZJ Offshore, which owns the yard in China. Cummings, in his note, highlights that YZJ is a powerful senior partner. “Even against the current malaise in the oil services sector, we believe that YZJ Offshore has the potential to succeed in its ambition to become a major offshore yard in Asia,” he added.
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