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Solo Oil upside eyed by house broker ahead of pivotal Horse Hill planning decision

Published: 03:58 27 Jul 2017 EDT

onshore drilling operation
Shore Capital’s valuation suggests some 275% upside to Solo Oil’s current price

Shore Capital has repeated a positive valuation for Solo Oil PLC (LON:SOLO) as analyst Craig Howie, in a note, looked at the progress being made in an emerging onshore UK oil play.

Solo has a 6.5% interest in the Horse Hill project, a recent discovery that was tested successfully, but, is presently awaiting planning decision.

Other small caps such as UK Oil & Gas Investments (LON:UKOG) and Angus Energy PLC (LON:ANGS) have been in favour among speculative investors in recent weeks, driven by their success in other nearby projects – namely the Broadford Bridge and Brockham wells.

Whilst Solo doesn’t have a stake in those projects, the emerging success further de-risk the Kimmeridge oil play upon which all three projects are based.

In his brief note, Howie highlights that a pivotal decision could come for Horse Hill in either August or September.

If the decision is in favour of the oil project, a programme for a longer term production test could get underway before the end of the year, and two further Horse Hill wells could also be in the works.

“Recent exuberance in the share prices of other names has been driven by encouraging results from nearby projects, most notably Broadford Bridge which has become another flagship asset for UKOG and is located in proximity to the Horse Hill field,” Howie said.

He added: “We highlight the positive read-across provided by other Kimmeridge wells in the vicinity and, having received considerable comfort on the impact of changes in Tanzania on the domestic natural gas sector in that country, maintain our (post consolidation) Risked NAV estimate for Solo at 18p/share.”

Shore Capital’s valuation suggests some 275% upside to Solo Oil’s current price of 4.82p.

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on 21/7/17