Canaccord Genuity lowers target price on Deltic Energy

Deltic announced the farm-out to Dana Petroleum of a quarter of P2437, which contains the Selene exploration target scheduled to be drilled in Q3 24.

Canaccord Genuity sees the transaction as "an excellent result" for Deltic as it retains a significant 25% interest in Selene while now being effectively fully carried for the upcoming well costs.

"As a result, Deltic will have farmed out separately to two high-quality partners, first Shell and now Dana, a total of 75% of its original 100% interest in Selene. The outcome is that Deltic is now fully carried for its 25% share of the Shell estimated success case well cost of gross $47.0m (drilling and testing). Deltic expects this transaction to complete in the near future,"" said Canaccord, which reiterated its 'speculative buy' rating on the stock.

The Canadian bank added that "much more important" than its mechanical target price change was the presence of "two excellent partners", noting that Deltic has effectively fully carried Selene well participation, and the company's "still significant 25% ownership", which provides "meaningful upside" in the success case and room for a further farm-down or outright sale in the future.

Reporting by Iain Gilbert at Sharecast.com