Circle Oil shares soar almost 27% on latest find

Limerick-based exploration firm, Circle Oil, yesterday saw its share price soar by nearly 27% on the back of it finding considerably more gas than expected at the third of a current 12-well drilling campaign in Morocco.

The AIM-listed company — whose asseets are spread across Egypt, Morocco, Tunisia, and Oman — announced that drilling to a target depth of 1,980m at the KSR-12 well at the Sebou permit in Morocco found 20.5m of gas, well ahead of company expectations.

The result also keeps Circle’s 100% strike record, for its current campaign, intact with the previous two wells having already yielded positive results. This, however, is comfortably the best result to date in the campaign.

Professor Chris Green, Circle’s outgoing chief executive, said that this find could prove very significant for the company. “We believe that this well will add significant volumes to our reserves for potential gas production and at rates not subject to oil price fluctuation,” he said.

Analysts added that the find is timely.

“The well encountered a thicker sand section than pre-drill prognosis, flowed at the highest rate of the campaign and should result in an increase to existing reserves booked in Morocco. KSR-12 is, therefore, in our view, just what was required against an unsettled commodity backdrop and a company in transition,” commented Brian Gallagher of Investec, which has reiterated its ‘buy’ recommendation on the Circle stock and sees its shares trading at a deep discount — around 60% — to discovered barrels.

Circle is carrying out its current drilling campaign with local partner, ONHYM, with the wells evenly split between the Sebou and Lalla Mimouna permits. Circle’s London-based share price closed at 12.85p yesterday, 26.75% up on Friday.