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Berenberg ups target price on Jadestone Energy

Tue 19 November 2019 10:53 | A A A

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(Sharecast News) - Analysts at Berenberg upped their target price on upstream oil and gas firm Jadestone Energy on Tuesday following the group's acquisition of a 69% working interest in the Maari project in the Taranaki Basin, offshore New Zealand.

With the Asia Pacific-focussed firm buying 13.9m barrels of 2P reserves and roughly 4,500 barrels of oil per day production for a headline cash consideration of $50.0m, Berenberg raised its price target on the group to 130.0p from 110.0p after incorporating the deal into its net asset value.

"Jadestone is one of our top picks in sector, being one of the cheapest stocks under our coverage," said Berenberg.

"Jadestone has been focused on finding value propositions in the upstream sector in south-east Asia, where it can add value and growth through further investment that was not taken by the previous operators. Maari fits the bill."

The German bank said Jadestone was buying a free-cashflow generative asset that added further growth optionality at a "cheap price".

"Production of the remaining 2P of 13.9mb does not require significant capex, but we estimate that Jadestone could add more than 10mb in further 2P volumes through incremental investments."

Berenberg also noted that its figures excluded the undeveloped Manaia oil field, with oil in place potentially of up to 300mb, albeit with "a more challenging geology".

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