Macquarie has been reviewing its coverage of the European E&P sector after updating its oil price and FX assumptions, giving rise to several recommendation and target price changes.
Relegated stocks included Ithaca (LON:IAE) and Premier (LON:PMO) – both cut to underperform from neutral – along with EnQuest (LON:ENQ) – cut to underperform from outperform – which it says is due to their reliance on near-term cashflows.
Genel (LON:GENL) was also downgraded – to underperform from neutral – due to the production downgrade announced in January.
On the flip side, Macquarie said that it was looking for stocks that can create value in a US$70 long-term pricing environment, with Tullow (LON:TLW) and Aker BP seemingly fitting the bill.
Analyst Kate Sloan explained: “Both Tullow and Aker BP have multiple pre-FID projects that should be able to take advantage of the current low services cost environment, whilst delivering high return cash flow into rising oil prices.
“As such, we reinstate our Top Pick status on both stocks and upgrade both to Outperform (from Neutral).”
(LON:ENQ) EnQuest Plc share price was -0.12p at 46.38p
(LON:GENL) Genel Energy PLC share price was -0.25p at 68.75p
(LON:IAE) Ithaca Energy Inc share price was +0.25p at 108.25p
(LON:PMO) Premier Oil PLC share price was -0.75p at 85.5p
(LON:TLW) Tullow Oil PLC share price was +1.95p at 298.45p
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