BW Energy (Buy, TP: NOK20.00) - High operational leverage to rising oil prices, support from net cash
Although the downturn hit the equity at an unfortunate time for BW Energy, we believe the company has made the right strategic decision to postpone capex. In our view this gives it solid support from net cash of NOK7.3/share balanced with high operational leverage to rising oil prices. Of the E&P companies we cover, BW Energy offers the most compelling implied oil price of USD40/bbl backed by stable cash flow from production. We reiterate our BUY and NOK20 target price.
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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