Analysts at Canaccord Genuity initiated coverage on exploration and production outfit Deltic Energy with a 12.5p target price and a ‘speculative buy’ rating on Tuesday, primarily due to the group’s two-well UK gas exploration programme.
Canaccord Genuity noted that Deltic Energy has two exploration wells to look forward to over the next 12-18 months, the first of which, Pensacola, was due to start drilling in mid-November, with results expected very early 2023. The second well, Selene, was pegged to be drilled in roughly 12 months.
“Deltic is fully funded for these wells through a combination of cash resources and financial carries from Shell which farmed-in to and is now operator of both wells,” said Canaccord.
“Success at either Pensacola or Selene could deliver a step change in Deltic’s market value, and our risked value for each fully supports Deltic’s market value. As always though with exploration, there may be significant market volatility depending on the results.”
While Pensacola and Selene were “clearly” the near-term operational focus and primary market catalysts, the Canadian bank also acknowledged that Deltic has a number of other licences in the UK.
Reporting by Iain Gilbert at Sharecast.com
