RE: Broker rating 23.92p6 Nov 2024 08:37
Attractively valued vs peer group: we believe UOG is an outlier in the AIM-listed exploration
sector, with outsized upside potential. At a MC of £2.2m it is amongst the smallest E&Ps on
AIM. Fellow explorer Challenger Energy owns earlier stage assets offshore Uruguay and has just
farmed-out to Chevron, for a US$15m carry on 3D seismic. At £15m its MC is more than 6x
UOG’s (see Figure 1, above). Meanwhile, Upland Resources has a Joint Technical Study (PSC
application underway) over an exploration block onshore Sarawak with no major partner or
drilling funds, yet its MC currently exceeds £35m. In our minds, if UOG is successful at farming
down Jamaica its share price could easily rise 5x (implying a MC of £11.0m or 1p/shr), given the
size of the prize and comparable listed exploration plays. We believe part of the reason for
UOG’s valuation disconnect is the large share price draw down in the lead up to exiting Egypt