Broker snap: San Leon to cash in some assets

10th Sep 2010 13:19

Daniel Stewart has initiated coverage of AIM-listed oil explorer San Leon Energy with a 'buy' recommendation and a target price of 30p, twice the level at which the shares currently trade."San Leon built a world class portfolio in short order. Their assets are in Poland, Morocco, Albania, Italy, the US and the Netherlands and were acquired at very attractive prices," Daniel Stewart believes.Though some blocks are impractical for the company to exploit, because of water depths, Daniel Stewart expects that management "will move to monetise these blocks in the very short term.""Some, like Barryroe, Schull and others in the Celtic Sea will be packaged and sold. Others will see their value proven at less than drill cost via a seismic programme that San Leon signed with PGS that will conserve cash. These we expect will be farmed out generating cash and a free carry for San Leon in the block," the broker predicts.The broker is looking for a consistent stream of news from the company as well as peers operating in the same areas to underpin the "buy" case for the shares.