The May 2014 declaration of commerciality paves the way for the phased development of the 1.7bnbbls OIP Tsimiroro resource. Such a development, although a long-term endeavour, has the potential to create very material upside for investors. The sheer size of the deposit could support production plateaux of up to 100mb/d over time, and steamflooding could see recovery factors of 50% or more. Development of the field will require more capital and we expect the company to raise funds in the near term to support the first phase (up to c 10mb/d). In our valuation, we assume a second phase of up to gross 50mb/d, while the upside to 100mb/d will be de-risked in time. Our NAV is 61p/share, although a full-scale development could eventually see a significant multiple of this value being realised.

Unlock the rest of this Article in 15 seconds

or Unlock with your email

Already have an account?
Login here