2018 target 36p: If things fall into place!!2 Jul 2019 08:02
OVERVIEW
Mirabaud analyst reckons Lekoil shares could double over the next year
13:15 03 Jul 2018
Lekoil's shares currently trade at around 18p, but Mirabaud analyst James Midgley thinks they are worth at least 36p, and possibly more if a few things fall into place.
Once that is all sorted, Lekoil expects to finalise its funding plans for the drilling programme.
“Naturally, while question marks remain over Lekoil’s ultimate interest in the licence, any new partnering discussions have been conceptual at best,” explained Midgley.
“Given the scale of the opportunity however (774 mmboe, gross recoverable P50 resources), and the work done in maturing the project (including GE’s commitment to provide US$1bn of development finance subject to successful appraisal of the field), a resolution to the partnership issue, in Lekoil’s favour or otherwise, could be the catalyst for a farm out in short order.”
Analyst forecasts
The analyst has trimmed his production guidance for the next couple of years slightly to 5,750 bopd and 8,813 bopd in FY18 and FY19 respectively.
He has also included the higher oil price environment into his calculations, which offsets some small rises in operating.
“On our numbers we expect Lekoil to generate c.US$37.5m of adjusted operating cash flow over the course of 2018.
“This is equivalent to an EV/NCF multiple of 4.5x. On this basis alone Lekoil offers good value for money, however any developments on the regulatory approval for the increased stake in Ogo could surprise on the upside, with virtually nothing currently in the price for the discovery which we value at almost £1/shr, unrisked.”
Midgley repeated his ‘buy’ recommendation and target price of 36p.
https://www.proactiveinvestors.co.uk/companies/news/200050/mirabaud-analyst-reckons-lekoil-shares-could-double-over-the-next-year-200050.html
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