Tangiers’ imminent oil well could be worth up to $8.50 a share, say leading analysts
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With its shares currently trading at just 28c, latest research reports say investors stand to make huge profits on the back of the highly promising well about to be drilled off the Moroccan coastNot one, not two, but three brokers are now recommending investors buy Tangiers Petroleum (ASX:TPT) shares to take advantage of the potentially massive upside offered by an oil well about to be drilled off the Moroccan coast.The research analysts say the oil in the well could be worth up to $8.50 a share to Tangiers, giving investors a “compelling risk-reward proposition”.Tangiers has a 25 per cent stake in the well, which is being funded (up to US$33 million) and drilled by petroleum major Galp Energia.The well - which is expected to be spudded within a fortnight - will tap an enormous structure measuring 70km by 10km. As well as being huge by any industry standard, the investment attraction is made even greater by the fact that the chances of success are put at a whopping 21 per cent – at least four times higher than most wells.Much of the excitement surrounding the well, branded TAO-1, is due to the oil discovery which has been made immediately next door.The reservoir being targeted by TAO-1 shares the same host rocks and is in the same carbonate play as the adjacent Cap Juby oil discovery. Tangiers also points out that the same seismic work which rightly predicted that a key zone in Cap Juby would be a poor reservoir has also predicted that the reservoir quality at TAO-1 would be of good quality.The chances of success are also boosted by the fact that TAO-1 has three separate targets within the one reservoir.The research analysts say that just one of these targets, the Trident prospect, has the potential to send Tangiers shares through the roof.
Foster Stockbroking has just put a speculative buy recommendation on Tangiers shares, describing TAO-1 as “potential company-making well”.“The Trident prospect has exceptional un-risked upside estimated to be $7.50 a share,” Foster said in its latest note. “There is a significant divergence between potential uplift in valuation and market capitalisation.”Institutional stockbroker BBY has also put a speculative buy recommendation on Tangiers shares.BBY has set a price target of 82c but says the real upside lies in what could happen to Tangiers shares if just the Trident target contained oil.It says this target alone could see Tangiers’ shares valued at $5.60.BBY believes the potential for Tangiers shareholders is abundantly clear. “Delivery of expectations could see the value (of Tangiers) exceed $1 billion – a value uplift of 30 times,” the broker said in its latest research note.And broker Edison also sees strong potential for investors to enjoy huge windfalls, valuing the stock at 70c but noting that “success could see multiples of this”.Edison places an unrisked valuation on Tangiers of $8.54 a share.“Tangiers is a chance to invest in a pure-play binary exploration well with potentially very large upside,” it says.“With Tangiers, investors have the potential for material, near-term drilling with significant upside in the case of success.”
