Xcite Energy (LON:XEL,CVE:XEL) has been back in favour with investors this week as it approaches the start of a long awaited work programme.
It was a top performer in 2010 before spending much of last year in the doldrums. But the shares have gained almost 90 per cent in London this week, to trade as high as 187p each (294 Canadian cents).
This comes as the group prepares for the initial phase of development for the Bentley oilfield.
Yesterday Xcite hosted an analyst and media day in Dundee, where the newly built Rowan Norway rig is currently moored ahead of a development drilling programme.
Analysts were told that two wells will be drilled and a 90 day production test will be completed as part of the programme.
It is believed that Xcite may be able to start work on the first development well at some point this month. That requires approval from the UK Department for Energy & Climate Change first however. The DECC inspected the rig on Wednesday.
In a note to clients today Seymour Pierce analyst Dr Doug Youngson said the share price reaction is a sign that investors are desperate for any information.
“We feel that the DECC approval and subsequent departure of the rig should provide major drivers for the share price.
Any conversion of contingent resources into reserves should also enhance valuation.
The share price performance will continue to be strong in anticipation of newsflow, he added.
Seymour Pierce has a ‘buy’ recommendation on the stock with a 242p (380 Canadian cents) target.