Canaccord Genuity raises target price on Star Energy

Analysts at Canaccord Genuity raised their target price on oil and gas extraction firm Star Energy from 55.0p to 66.0p on Wednesday, taking account of new commodity assumptions.

Canaccord Genuity noted that in 2023, conventional oil and gas production "remained robust" at 2,100 barrels of oil equivalent per day and "substantially ahead" of FY22 output, but noted that financial performance had been constrained by lower commodity prices and the adverse impact of a stronger GBP.

However, the Canadian bank stated that the current upstream emphasis appears to be shifting towards asset optimisation through small-scale projects, with rapid payback periods to bolster production as larger initiatives in Bletchingley, Corringham and Glentworth advance towards implementation.

"The reopening and testing of the geothermal Ernestinovo-3 well in Croatia was completed in a record timeframe although later than originally anticipated. Those results have been submitted to the Croatian authorities, fulfilling the JV commitments, and that paves the way for acquiring a development licence, which we anticipate from the second half of 2024 onwards and we expect to trigger further licence activity," said the analysts, who reiterated their 'buy' rating on the stock.

Canaccord Genuity also noted that a solid reduction in net debt in 2023, along with its newly acquired €25.0m banking facility from Kommunalkredit Austria, alleviates any concerns regarding the repayment of debts due in June and secures funding for upcoming ventures in both the oil and gas and geothermal sectors, providing scope for increased operational activity.