KEA Petroleum are an aim listed Oil & Gas E&P company with assets in New Zealand, Last year the company really suffered in what can only be described as choppy waters for junior oil and gas companies, We at ValueTheMarkets believe that the sentiment towards the sector has really picked up. The bashful nature of 2013 has rescinded somewhat which has presented a more meaningful period throughout junior O&G space.
New Zealand has been pegged on the map by Mosman Oil&Gas over recent weeks and whilst there are many questions over the recently announced discovery we believe it has been left far to open to interpretation, KEA on the other hand look to have commenced their recovery after a difficult period which has seen farmout agreements signed and completed, a recent funding drive finalised leading into a busy drill and workover period imminently pending.
KEA is producing around 40,000 barrels per year which means its £2.4m revenue stream is likely to improve during 2014, £3m from the current metrics looks realistic and once the Pucka workover and drilling has been completed then production is inclined to improve quite significantly as the field secretes further adding credence to our opinion that KEA is a Buy.
The reflective effects of Mosmans recent run in New Zealand coupled with KEA’s own footprint of production and near term drilling leads ValueTheMarkets to believe that the shares will be trading hands at a much higher price than today, for those who follow the P/E metrics then a baromomter so appealing is hard to come by.
BUY at 1.565p
