Merchant Securities is very excited about the potential upside offered by Max Petroleum’s (LON:MXP) ongoing drilling campaign in Kazakhstan, which is not fully reflected in its bullish target price of 33.7 pence.
Analyst at Merchant Securities Brendan Long said the Kazakhstan focused oil explorer’s successful well targeting the Sagiz West prospect in Kazakhstan has substantially de-risked another three look-alike prospects about to be drilled.
Long highlighted that its price target, while significantly above yesterday’s closing value of 12.75 pence, does not assign any value to the three upcoming Triassic Rim prospects that will follow Sagiz West.
The Merchant Securities analyst highlighted that the remaining drill work in 2011 is expected to feature two Triassic Rim prospects, Zhalgiz South and Uytas North. Indeed a well was spudded last week to test the former. A third Triassic Rim prospect, Karasai South, could be drilled this year or early in 2012, Long said.
Zhalgiz South has a pre-drill best estimate of 18 million barrels, while Uytas North and Karasai South have been estimated to contain 11 million barrels and 12 million barrels respectively.
The company is also working on more than six Triassic Rim leads which could eventually become drilling prospects.
In the meantime, Max is currently drilling the ASK-2 well on the Asanketken field in Kazakhstan following the ASK-1 well that produced at a stable rate of 672 barrels of oil per day (bopd) during a 12 hour test.
The current price target gives a 34 percent chance of success to the ASK-2 Triassic well, which Long said was “conservative”, given that the ASK-1 well has significantly de-risked ASK-2 by proving the presence of oil. Read More
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