88 Energy is a mispriced opportunity, that's according to this punchy new target price Proactive uses images sourced from Shutterstock

AIM-quoted Alaska oil explorer 88 Energy Ltd (AIM:88E, ASX:88E, OTCQB:EEENF, FRA:POQ) is a potentially mispriced infrastructure play, that's according to analysts at stockbroker Cavendish, who have slapped a 'Buy' rating and 22.5p target price on the small-cap stock.

It's a speculative call that implies more than 11-fold upside from 88 Energy's current 1.8p share price.

The broker’s pitch isn't typical for the normally high-risk, high-reward dynamic in this sector. For Cavendish, the bullishness is not centred on frontier wildcatting, but instead low-cost tie-back economics.

Cavendiish argues that 88 Energy’s recently acquired South Prudhoe acreage, lying beside the infrastructure linked to Prudhoe Bay and Kuparuk River, gives the group a faster and less capital-intensive route to commercialisation than many early-stage explorers can offer.

The acreage “provides investors with a differentiated Alaskan investment proposition” and described the prospectivity as “low-risk, low-capex” and capable of being “rapidly commercialised to generate near-term returns," the broker said in a note.

The near-term centrepiece is the Augusta prospect, where 88 Energy has identified a combined gross 2U prospective resource of 64.4 million barrels across the Ivishak and Kuparuk reservoirs, with an exploration and appraisal well planned for the first quarter of 2027.

Cavendish’s model, based only on the Ivishak interval, points to a net NPV10 of US$426 million, a post-tax internal rate of return of 61%, and payback in about 2.8 years. That excludes the additional 23.5 million barrels attributed to Kuparuk at Augusta, leaving further room in the story if drilling goes the right way.

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