As Deltic Energy PLC (LON:DELT) expands its North Sea portfolio, Allenby Capital sets a 13.7p per share risked valuation for the explorer – signalling particularly substantial upside from the current share price of 0.88p.
Allenby’s new marker represents an upgrade from a prior valuation of 9.8p per share.
On Thursday, Deltic confirmed it received six awards in the UK government’s latest offshore licensing round.
The newly added acreage spans a total of 2,155.5 square kilometres and is described as “highly prospective”. According to Deltic the awarded licences contain prospects that can be rapidly matured and greenfield exploration opportunities to diversify the portfolio.
Chief among the company’s opportunities is the Pensacola exploration venture, partnered with Royal Dutch Shell.
“We see scope for positive news flow over the next few months, not least from the evaluation of Shell’s recently obtained processed 3-D seismic over Pensacola,” Allenby analyst Peter DuPont said in a note.
“Following Pensacola, the Selene prospect is scheduled to be drilled in mid-2022.
“The recent 32nd Round UKCS licence awards greatly expands Deltic’s exploration potential in the CNS and particularly the SNS Carboniferous fairway. Here some highly prospective acreage has been obtained.”
DuPont added: “Our success case valuation for the three most advanced projects remains unchanged at 17.5p/share.
“The risked valuation on this basis is £120mln or 8.5p/share. The share price reflects a very cautious view of valuation and stands at a c.90% discount to our risked estimates.”