Investment summary

As Nautical’s flagship Kraken field moves from exploration to development, investors have been understandably wary of dilution risk. However, following a transformational farm-out agreement with EnQuest and a highly encouraging reserves upgrade, all the pieces are falling into place. We carry a core NAV of 463p based on Kraken, Catcher and Mariner, offering investors the potential of significant short-term upside, while on an unrisked basis this would increase to 629p as developments move ahead. Meanwhile the next potential share price catalyst is the drilling of Carnaby in the Greater Catcher Area, now expected to spud in May.

Last updated on 23/04/2012

Industry outlook

With the Kraken deal also offering the potential to improve Nautical’s funding capacity for Catcher, thus preserving shareholder value, the company is one of only a few small mid-cap developers in a capital intensive industry who offer significant upside with ever diminishing execution risk.

Last updated on 23/04/2012