Interactive Investor

Antrim Energy: What the analysts say

30th July 2014 15:34

Lee Wild from interactive investor

Antrim Energy has a habit of springing surprises. While it's true, they've been largely negative since the beginning of 2012, every so often the Calgary-based explorer watches its share price double. It happened again on Tuesday.

Having closed at 3.25p Monday night, news of a potentially game-changing find offshore Ireland generated enough interest to get the price up above 9p by 10am Tuesday. It was still 7p at the close of play. A similar thing happened in October and in both January and again a month later - on each occasion the shares rocketed by at least two-thirds. But those rallies had little or no justification. This time, it's very different.

A report just evaluated by McDaniel & Associates Consultants on the Skellig Block off the coast of Ireland has truly significant implications for Antrim.

It estimates total unrisked gross best estimate prospective resource potential of 1.1 billion barrels of oil equivalent on the licence. That includes over 260 million barrels of oil, 4.7 trillion cubic feet of gas and 87 million barrels of condensate. This method puts the chances at 50%.

But it could be significantly more. A top-end estimate (10% chance)puts the figure at over 4.5 billion barrels of oil equivalent - 1.1 billion barrels of oil, 17.9 trillion cubic feet of gas and 429 million barrels of condensate.

"Results from the recently acquired 3-D seismic programme strongly indicate the presence of Lower Cretaceous slope fan and channel deposits similar in geometry and seismic character to many of the recent Cretaceous oil discoveries offshore West Africa," said Antrim.

House broker RFC Ambrian has kept its speculative buy rating. "We believe these prospective resources are large enough to be of interest to most large/mid-cap oil companies and this should allow Antrim to farm out part of its 25% interest in the licence for carry on an exploration well," said analyst Stuart Amor.

Last month, the broker said that if the Fyne Field - discovered by Mobil Oil in 1987 - is sanctioned the stock could be worth as much as $38 million (£22.47 million), or 12p per share, using an average peer US$8 a barrel multiple for net proven and probable (2P) reserves.

Antrim acquired the licencing option over Skellig in 2011. It then farmed out a 75% interest to American oil heavyweight Kosmos Energy which agreed to cover Antrim's costs for a huge seismic programme completed last year.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Related Categories

    commodities