By PATRICK TALU
NEW Guinea Energy (NGE) says its shares price fell after the high impact Panakawa well failed to find oil.
However, a revised deal with joint venture partner Talisman Energy means three to six exploration wells could be drilled next year.
In a statement, RBS Morgans Ltd analyst Nik Burns said at the current share price, NGE would make an inexpensive acquisition for someone looking to expand its position in PNG.
“We view the NGE shares price as over-sold and rate it as a speculative buy, target price to A$0.21,” Burns said.
The high impact well was drilled in third quarter this year, but failed to intersect oil.
On a positive note, the well did intersect a structure with a viable reservoir, and the well was drilled for under US$11 million.
But this did not protect the shares , which fell to as low as US$0.10.
NGE has renegotiated the terms of the Talisman deal to PPL 268 and 269.
At least three wells are now expected to be spudded by June 30 next year.
In addition to this, NGE is progressing plans to drill up to three additional wells in its other foreland blocks.
“PNG is relatively under-explored and is highly prospective for oil and gas with attractive fiscal terms on offer,” Burns said.
There should be plenty of news flow on drilling activity and results, beginning next January, he said.