Broker snap: Seymour Pierce initiates Providence Resources at buy

11th Oct 2012 13:12

Analysts at Seymour Pierce have written a very upbeat research note on the shares of Ireland-focused oil exploration group Providence Resources.In their own words: "whilst Providence's success at Barryroe has had a transformational effect on its share price, the company's exploration and appraisal campaign is far from over. The company intends to target multiple prospects across five further geological basins. 2013 should focus on high impact exploration at Dalkey Island, Dunquin and the Rathlin Basin; and moderate risk development drilling at Spanish Point."In greater detail they add that: "Our valuation of cash and cash equivalents (59p/share) and a risked valuation of Barryroe (1,106p/share), illustrates that Providence is currently trading at a discount to its core NAV. We also include a risked net asset valuation of the company's moderate risk appraisal assets which would add a combined 372p/share to our overall valuation. "We have intentionally stripped out high impact Dunquin (186p risked) and Dalkey Island (141p risked) to reflect the underlying value of the company prior to the significant upside that any one of these prospects could generate if successful. On this basis, we initiate coverage with a BUY recommendation and 1,538p target price."As of 13:11 shares of Providence Resources are falling 2.6% to the 682p level. AB