Pancontinental Energy's (ASX:PCL) extension of the Petroleum Exploration License 87 permit by the Namibian government is a "materially positive development" for the company and eliminates the most immediate de-risking hurdle of tenure uncertainty, Euroz Hartleys said in an April 2 note.

The Namibian Ministry of Industry, Mines and Energy approved the extension of the current first renewal exploration period for the PEL 87 by 12 months to Jan. 22, 2027, and Pancontinental management continues to target a farm-in partner as its main near-term objective, the equity research firm said.

"Positively, progress is well underway on the updated work program commitments with work on the [Environmental Impact Assessment] commencing in mid-2025," Euroz Hartleys said, adding that the company remains comfortably funded for the medium-term with a cash balance of AU$3.2 million at the close of the last quarter.

Pancontinental owns a 75% interest in PEL 87 and is well-positioned to farm down for single or multiple exploration well carries, providing funding and work-program timing certainty. It could also benefit from longer-term upside on eventual drilling and potential discovery, which could be multiples of the current valuation, given the exploration target size, Euroz Hartleys said.

The equity research firm maintained its speculative buy recommendation and AU$0.028 per share price target on the company, noting that a successful farm-out to fund drilling activity could drive a re-rating.