ProActive Investors UK
Pura Vida
www.puravidaenergy.com.au
by Giles Gwinnett
On Friday, the firm said the offshore Mazagan permit now has total mean prospective resources of 7 billion barrels, with 5.3 billion barrels net to the company, with its 75 per cent interest
Brokers have rushed to increase their target price for Morocco-focused oil explorer Pura VidaEnergy (ASX:PVD) after a major upgrade to its resource estimate last week.
On Friday, the firm said the offshore Mazagan permit now has total mean prospective resources of 7 billion barrels, with 5.3 billion barrels net to the company, with its 75 per cent interest.
This more than doubled the company’s previous net estimate – of 2.4 billion barrels.
What’s more, the chance of success across the prospects reviewed have increased to 34 per cent, from 19 per cent previously.
The release of the upgrade represents a huge boon to the firm, as it plans to commence a formal farm-out process on the asset later this year to secure funding for drilling – at a time when there is huge interest in oil exploration offshore Morocco.
The upgrade was conducted by independent group DeGoyler and MacNaughton (D&M).
It provides estimates for 13 prospects, including three new targets – Tafraoute, Amtoudi East and Amtoudi West.
Combined these three add 2.1 billion barrels of oil equivalent to the total resource and each have a 32 per cent chance of success.
Also, the firm’s giant Toubkal prospect alone has been handed a mean resource potential of 1.5 billion barrels and given a 31 per cent chance of success.
House broker N +1 Brewin rates the stock a ‘buy’ and has increased its target price to A$2.25 from A$0.87.
“Following the farm-ins of Genel and Cairn to adjacent acreage, PVD will commence its farm out process at the start of October. Given these deals and the entry of Total, Anadarko and Kosmos to Morocco we would expect significant industry interest,” said analyst Jack Allardyce.
Last week, Allardyce noted that the “read-across” values from farm-ins on adjacent acreage imply that Pura Vida could justify a significantly higher valuation for its acreage than at present.
Broker Hartleys, which also rates the stock a ‘buy’ has increased its target price to 188 cents per share, from 113 cents previously.
It reckons it is safe to assume that the company will achieve a farm-out, given factors, such as the quality of the acreage and the size of the prospects, that will result in drilling within 18 months or possibly sooner.
Meanwhile, Foster stockbroking has initiated coverage with a ‘speculative buy’ rating and an initial target price of A$1.50 a share.
It says there are some significant high impact catalyts which should continue to drive the share price upward.
“These include results from a drop core program which will test for presence of hydrocarbons on the sea bed and the commencement of a farm-out process, all of which are expected to occur by the fourth quarter of calendar year 2012,” it said.
Pura Vida shares were last trading up 4.29 per cent, at A$0.730.
