Calima Energy Ltd (ASX:CE1) has had its share price target lifted from A$0.035 per share to A$0.75 by Auctus Advisors as the broker believes the shares “continue to offer a combination of value and cashflow and reserves growth".
The broker noted the good August production performance as well as the financials for the month, which it said were broadly in line with expectations.
Three new Thorsby wells drilled in August and September could be on stream for November with an individual IP rate of around 270-460 boe/d.
This suggests that Calima is well on track to meet its production guidance of 4.5 mboe/d by year-end 2021.
Accelerate investment program?
With the high commodity prices and its strong production, Auctus said Calima could accelerate further its investment program to grow production between the 5.5 mboe/day by year-end 2022.
An enhanced program would also probably have a positive impact on reserves, the broker noted.
Montney assets
Auctus added it was not carrying any value for Calima’s Montney assets in Northeast British Columbia, Canada.
Calima has initiated a process to maximise the asset value by selling part or all of its Montney interests.
A successful outcome of the process could be “very accretive to our valuation”, the broker said.
Although it is difficult to quantify the potential value of the Montney assets, Auctus highlighted that Calima had a market capitalisation of around A$15 million when it only held the Montney assets.
Applying the same appreciation factor as seen in Tourmaline Oil Corp (TSX:TOU)’s share price, it would suggest a current value of A$24 million for the Montney assets.
This would represent around A$0.06 per share.
Valuation
Its 2P net asset value (NAV) for the company continues to be around A$0.33 per share with a RENAV of A$0.74 per share. The shares continue to trade at an EV/DACF multiple of more than two times in 2022.