Chief executive officer at Europa Oil & Gas (EOG:AIM) Hugh Mackay has snapped up nearly £45,000 worth of shares ahead of a key period of drilling for the company. The firm’s forthcoming exploration campaign could lead to a step change in the market’s valuation of its assets.

Last month we discussed the shale potential in the group’s portfolio (see Small Caps, Shares 23 Jan) but the focus this year is on conventional prospects. This includes a well targeting the 2.9 million barrel Kiln Lane prospect on its PEDL-181 licence in Lincolnshire.

House broker finnCap says Kiln Lane and the nearby non-operated Wressle well have combined upside potential of 12.7p a share and adds they could generate cashflow in the near-term. Success at Kiln Lane could also de-risk a large and previously undrilled licence where the £15 million cap has identified shale gas potential.

Elsewhere a farm-out of its Bearn des Gaves permit in France would allow the group to test the 416 billion cubic feet Berenx gas prospect. Meanwhile in 2015 the company could drill a well on its two licences in the Porcupine basin offshore Ireland. It is partnered by US firm Kosmos Energy (KOS:NYSE) which is funding a $220 million work programme in return for an 85% stake in the acreage. Seismic interpretation work is due to complete in the first half and Europa expects to commission an independent audit of the identified prospects ahead of drilling.

Crucially the group is fully funded for the planned work programme having raised just over £4 million through a placing and open offer around the turn of the year.

An active work programme justifies the bullish consensus view at 9.4p.

THE TRADE

Buyer: Hugh Mackay, chief executive officer

Consideration: £44,762

No. of shares sold: 545,880

Subsequent holding: 2,340,883 (1.14%)