Value of Circle Oil soars after find
The company said that early drilling results from its first offshore prospect, located along the coast of Tunisia, suggests estimated recoverable resources of around 100m barrels of oil.
The news sent the AIM-listed firm’s share price rocketing by nearly 29% — or just over 5p — to 22.65p, and led one London-based analyst to slap a target price of 45p on the stock.
The find was at the El Medioiuni (EMD-1) well in the Mahdia Permit, offshore Tunisia. While full logging of the well — in order to gauge a record of the full geological formations — was made impossible due to a deterioration of drill hole conditions, Circle will take its appraisal work forward on the prospect “as quickly as possible” following this initial proof of oil.
“We are extremely pleased to add this potential large discovery to our portfolio in Tunisia,” Circle’s chief executive, Professor Chris Green, said.
London-based broker, Liberum — which currently has a ‘buy’ tag on the Circle stock — said the Tunisian news marks “a potentially transformational oil discovery” for the company.
“This could be a very significant discovery, worth more than 80p per share if management’s initial estimate of resources is confirmed,” it added.
Investec said it now expects Circle to seek farm-in/development partners for the project.
“Pending appraisal, this result is a significant step forward for Circle. A discovery of this size would potentially attract new partners to the basin and de-risks the five existing prospects already mapped on the block,” it said in a research note yesterday.
Circle — which reports half-year results and holds its AGM next week — recently suggested it is considering making its first dividend payment to shareholders, although this is not expected in the immediate future.
The Limerick firm has been listed on London’s AIM market for the past 10 years.
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