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Falcon Oil & Gas boosted by shale pioneer’s Aussie entry, broker says

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“That this play has caught the interest of a major shale player and pioneer should be taken as very encouraging for sentiment towards Falcon Oil & Gas"

Falcon Oil & Gas (LON:FOG) investors should be “very encouraged” by growing positive sentiment towards Australia’s Northern Territory, according to broker GMP Securities.

The AIM quoted Falcon is partnered in around 4.6mln acres in the region, and it is set for a drill programme later this year.

GMP’s oil and gas team, in a note, today highlights reports of a potential transaction that’s likely to raise eyebrows in the sector.

Aubrey McClendon, founder and former CEO of Chesapeake Energy, is said to be seeking capital for a new venture targeting around 5,000 square kilometres of prospective shale acreage, via a farm-in with Pangaea Resources. GMP said this was “clearly a significant positive”.

“That this play has caught the interest of a major shale player and pioneer should be taken as very encouraging for sentiment towards Falcon Oil & Gas, whose shares have already enjoyed a 90% run in the past month,” the Canadian broker said in a note.

Falcon is named a ‘top pick’ at the Toronto headquartered brokerage.

 “Falcon is a top exploration pick for us as we believe 2015 will be a defining year for the company as the Beetaloo is drilled and with a robust balance sheet, full carry and extremely material resources to get after, the announcement of securing a rig (expected imminently) should start to see a re-rating from a market starved of material exploration exposure,” it added.

According to GMP the Australian opportunity – one of three key asset groups for Falcon – is very material, and it estimates it could be worth about 68p per share.

Quick facts: Falcon Oil & Gas Ltd

Price: 12.4 GBX

AIM:FOG
Market: AIM
Market Cap: £121.75 m
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