In an intra-day update, Casimir Capital maintained its price target and "strong buy" rating on Greenfields Petroleum (CVE:GNF).
The junior oil and natural gas company is focused on the development and production of proven oil and gas reserves mainly in the Republic of Azerbaijan. It plans to expand its oil and gas assets through further farm-ins, and acquisitions of production sharing agreements from foreign governments containing previously discovered but under-developed international oil and gas fields, also known as "greenfields".
Analyst Ryan Galloway notes that both of the company's key drilling platforms are likely to be active by the end of December.
Recently, the Gum Deniz 601 step out well was found to be unsuccessful, with the well under evaluation after finding two zones to be "tight and wet".
Still, the analyst says this well had no valuation impact.
"Based on these results, Greenfields is re-evaluating future targets in this un-proven potential northern extension of the Gum Deniz field.
"With multiple other zones, we anticipate Greenfields to potentially place a less expensive service rig on location for further evaluation & testing. We note that this step-out well was not provided in any reserves in previous GLJ reporting, and was not a component of our valuation, which focuses on the more proven development & recompletion efforts to the south."
Meanwhile, recompletions are underway at the Bahar fields in Azerbaijan, and the company's PSG-1 rig is undergoing final modifications for drilling.
The PSG-1 workover rig is expected to spud its first well at the heart of the Gum Deniz development area in December.
The PSG-2 rig has recently started recompletion activity in the Bahar field., and with a third platform rig being tendered, Galloway writes that he could see a total of 3 rigs running by late in the first quarter of next year, helping to catch up, or potentially surpass, the original production plan.
Greenfields posted an average 1,159 barrels of oil equivalent per day (boe/d) for the third quarter, and the analyst expects the company to meet its guidance of 1,084 to 1,350 boe/d for 2012.
Casimir's Galloway has a $9.75 target on Greenfields, with the stock currently changing hands at around $4.80.