Mosman Oil & Gas tipped as a ‘buy’ ahead of aggressive drill progamme and production-led growth

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Mosman Oil & Gas Plc (LON:MSMN) is set for a very different second half of 2021 thanks to its production-led growth strategy, that’s according to stockbroker SP Angel.


AIM-quoted Mosman on Wednesday released its first half results statement for 2020 and told investors it had begun the third quarter with “renewed vigour”.


The company said that it is to focus on drilling activity and its position is boosted by its increased interest in the Greater Stanley project. It reported gross production of 34,569 barrels of oil from its operations over the first half, which works out as 9,871 barrels net to Mosman.


SP Angel analyst Sam Wahab, in a note, repeated a ‘buy’ recommendation for Mosman and noted that the stockbroker’s price target was under review.


“Given the significant operational activity achieved year to date, including the successful Falcon-1 well, in addition to an oil price recovery, we are confident that the second half of Mosman’s year will bear little resemblance to the first,”


“The company continues with the implementation of its successful production led growth strategy against the backdrop of a commodity price recovery in the US. Mosman will embark on an aggressive drilling programme in this year, which will likely include further wells on the Champion and Challenger leases in the US.”


In terms of financial results, Mosman on Wednesday reported some A$380,000 of revenue and said it made a gross profit of A$56,828. The company reported a A$700,000 net loss amid production challenges and the volatile oil prices.


It ended the six month period with A$776,549 of cash and equivalents.


“Whilst the first half of FY21 was extremely challenging with continued economic uncertainty, volatile oil price movements and production challenges, we remained resolute that we would weather the storm,” said John Barr, Mosman chairman.


Barr added: “We are well funded to deliver our exploration and development plan and expect to benefit from the recovery in energy prices.


“This coupled with the planned exploration at EP145 in Australia, where drilling results in nearby permits have demonstrated the commercial production of hydrocarbons reinforcing the potential for successful helium and hydrogen exploration, sets out an encouraging programme for the months ahead.”

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