Hungarian national newswire MTI reports that MOL will participate in a consortium with Australia’s Vulcan and Iceland’s Enex in a geothermic exploration project in West Hungary. The consortium will invest some HUF 0.5bn-1bn on the exploration activities. MOL’s stake in the project company is 36%, while the other two participants have 32% stake each. If the initial phase of the project is successful, the consortium plans to build 3-5MW geothermal power plant with envisaged cost of HUF 3-4bn. The company, which would potentially run the power plant, would have similar ownership structure.
According MOL, preliminary studies show that as many as 6 geothermal plants could be built in Hungary.
The new is minor due to the small size of the investment when compared to MOL’s result or annual CAPEX. Moreover, we have already heard about this intention at the end of last year when MOL spoke about strategic goals.
We keep our Buy rating on the stock with our price target of HUF 25,730.