Some 114.5mln United shares held by Rockhopper were sold to a small number of institutional investors and one private investor earlier this week. The shares, representing 18.3% of the company, were issued to Rockhopper as part of United’s Egypt acquisition.
Cenkos analyst James Mccormack, in a note, described the institutional buys as a vote of confidence.
“At a time of relative uncertainty in the sector, the placing significantly strengthens United’s shareholder base and provides a clear vote of confidence in the business model, management team and assets,” the analyst said.
He added: “A common complaint with small-cap stocks is a lack of liquidity, however in United’s case this is not the case.
“With an average daily liquidity of 1.7% of its free float over the past three months, United’s liquidity is only second to Hurricane (Energy) in the AIM E&P space. With a high amount of activity across its portfolio and regular engagement with both institutional and retail investors, United has definitely caught the attention of the market.”
The stockbroker rates United as a ‘buy’ and its new share price target is pitched at 17.1p, compared to the current price of 3.54p.
United’s acquisition of Rockhopper’s Egyptian subsidiary delivered valuable production.
The asset package included a 22% non-operating interest in the Abu Sennan concession onshore Egypt, where performance has exceeded expectations since the deal.