June 24 (Bloomberg) -- North Energy ASA, an oil and gas explorer, jumped to a 10-month high in Oslo after an appraisal well at the Norvag discovery in the Barents Sea encountered hydrocarbons.
Shares in the company, based in Alta in northern Norway, gained as much as 11 percent to 5.90 kroner, the highest intraday level since Aug. 31, and traded at 5.49 kroner as of 9:55 a.m. local time. More than 44,000 shares have been traded so far today, almost double the average daily volume during the last three months.
The well at Norvarg in license 535 “confirmed the presence of hydrocarbons in the Kobbe formation,” North Energy said in a statement today. The partners in the license will now perform a drill stem test to assess the quality of the reservoir and the volume potential, the company said.
North Energy, which has interests in licenses in the Norwegian, North and Barents seas, has a 20 percent stake in license 535, while Total E&P Norge, a unit of Total SA, is the operator with a 40 percent interest. Ithaca Petroleum Norge has a 13 percent stake in 535, while Statoil and Det Norske Oljeselskap each have 10 percent, and Rocksource ASA 7 percent.
The Norvag find represents about 50 percent of North Energy’s share price “on a conservative basis,” RS Platou Markets AS analyst Alex Gheorghe said in an e-mail. “With the presence of hydrocarbons in this appraisal well, along with the drill stem test, it’s clear the size of the discovery is only going up. “We expect 10 percent to 20 percent upside to the stock today, and re-iterate our buy recommendation,” Gheorghe said.
Rocksource gained as much as 6.7 percent to 1.27 kroner and traded 4.2 percent higher as of 9:55 a.m. Statoil fell 0.2 percent and Detnor declined 1.1 percent.
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