Galp shares soar by 20.64% to €19.35 on back of Namibia oil strike

Portugal’s oil and gas company Galp had its second best day on the Euronext Lisbon stock market yesterday since 2006 after it announced that it had struck oil off the coast of Namibia.

Galp called the strike an “important commercial discovery” with the potential of bringing in 10,000 million barrels of crude oil.  

In just one day the company made €2.5Bn in market capitalisation on Monday as shares soared 20.64% in value to €19.35 per share, meaning the second best session since 2006 when it floated on the stock market. The company’s other best performance on the stock market was on November 9, 2007, when shares leapt in value by 24.7%.

Galp is now the second most valuable company on the PSI-20 companies listed on the Lisbon stock market – overtaking renewables electricity company EDP Renováveis -now worth €14.9Bn — up €2.5Bn on its value on Friday last week.  

Investment bank Citi stated in a research note: “In our opinion, the results are close to the best possible scenario, confirming a discovery that is totally transformative for Galp”.

The financial analysts Equita, Oddo e Bernstein stated: “The size of the discovery of 10,000 million barrels is almost double our expectations”.

The Spanish investment institution Alantra in a note to Bloomberg increased the target price of Galp shares from €16.05 to €20.4 on the back of an expected increased valuation of 27.2% on the Friday session within the next 12 months.

That said, despite the optimism, the general consensus from 21 analysts that follow Galp shares believe there will be a devaluation of 13.1% over the next 12 months to €16.50.