It’s all about yields
Reflecting our lower oil and gas price assumptions, we have cut our target prices on our NCS large-cap stocks. Having the highest relative exposure to European gas prices – which we have cut the most – we have downgraded Equinor to HOLD (BUY), while we reiterate our BUYs on Aker BP and Vår Energi. With the share prices already implying ~USD80/bbl Brent, we believe higher oil prices are required for upside potential to unfold. Nevertheless, we believe dividends for both are set to remain stable or rise through 2026 at least. On our estimates they already offer competitive yields of 9–15% that could provide some downside protection to share prices while our base case is for oil prices to steadily trend up in 2024 and into 2025.Aker BP ASA engages in the exploration, development, and production of petroleum resources on the Norwegian Shelf. In addition, Co. has a separate Johan Sverdrup business unit to manage its interest.
Equinor is engaged in oil and gas exploration and production activities. Co. is primarily focused on exploration, development and production of oil and gas on the Norwegian continental shelf (NCS). Co.'s operations are organized into four segments. The Development and Production Norway and Development and Production International segments explore, develop, produce and extract crude oil, natural gas and natural gas liquids. The Marketing, Processing and Renewable Energy segment markets, trades, transports and processes oil and natural gas and renewable energy. The Other segment consists of global well and project delivery, research and develpoment, and business development.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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