Pancontinental Energy (ASX:PCL) is poised to secure a farm-down agreement for its Petroleum Exploration License 87, offshore Namibia, according to a Thursday report by Euroz Hartelys.

Despite Woodside Energy's decision not to proceed with its farm-in option, recent geological and geophysical work has boosted the prospectivity of the company's permit, Euroz said.

The company holds a 75% stake in the permit, which has a prospective resource size of over 1 billion barrels of oil, and a better than one-in-four chance of success, Euroz added.

However, Euroz believes that a funding deal for the permit could take time due to due diligence and approvals.

A farm-down could also lead to an upside of the company's share price if eventual drilling leads to discovery.

The firm maintained Pancontinental Energy's speculative buy rating and its AU$0.028 price target.