Circle Oil receives ‘buy’ rating from Westhouse

Mark Henderson, analyst at Westhouse, retains a ‘buy’ rating for Circle Oil, based on the company’s interim results.

“The company has reported sales of US$ 47.8 million on production of 6000 boepd (basically flat year-on-year), operating profit of US$ 12.2 million (down 26% year-on-year) due to lower cost oil recovery, costs associated with the delayed Mahdia well in Tunisia and higher DD&A. Net profit of US$ 9.4 million is down 36% year-on-year due to the factors above, while the company had net debt of approximately US$ 21 million at period end with US$ 75 million of available debt facilities undrawn.

“Ongoing development drilling in Morocco should deliver a boost to production later in the year and the company recently reported a discovery offshore Tunisia, but these results are slightly disappointing both operating and financially and we expect analysts will be revising down full year forecasts for sales and earnings following these results.

“Our view: The stock has rallied sharply in the aftermath of the Tunisia well result and we would expect the stock to give back some of these gains on the back of these results. At this time there are no plans for a conference call or presentation.

“We retain our Buy rating and 31p target price at this time. The key catalysts over the coming months are news on how Circle plans to appraise the Mahdia discovery in Tunisia, progress updates on drilling in Morocco and an update on drilling plans in Oman.”

Adapted from press release by Katie Woodward

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/05092014/circle-oil-interim-results-2014-1407/