LONDON (ShareCast) - (Sharecast News) - Analysts at Canaccord Genuity lowered their target price on exploration and production firm Southern Energy from 90.0p to 85.0p on Monday but said the group looked "set for growth" as US gas prices improve.
Canaccord Genuity noted that while drilling was taking place at Southern Energy's recently concluded seven-well programme on its Gwinville field in Mississippi, Henry Hub prices tumbled from $7 to just over $2 per thousand cubic feet.

"Southern receives a meaningful premium given its location, but the current pricing environment is unattractive so four of the seven wells have not been completed," said the analysts, who reiterated their 'speculative buy' rating on the stock.

"The present gas prices have set back the organic growth programme, resulting in a slowed expansion timetable, but the outlook, in our view, remains bright. The DUCs look to have the best drilling results so far and the shortest drilling times. We believe that sets the company up well for a return to production growth as gas prices improve and development drilling restarts with improved drilling efficiencies and better reservoir understanding."







Reporting by Iain Gilbert at Sharecast.com

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE