DNO (Buy, TP: NOK15.00) - Set for North Sea growth
We consider the Q3 results in line with expectations, with EBITDAX of USD107m versus our estimate of USD109m. While we find the new long-term North Sea production guidance a tad aggressive, implying a near doubling in production over 2024–2027, we still estimate the company will increase net production from ~15kboed in 2024 to >20kboed in 2027, while sustaining the current dividend level (yielding 12%), which should be covered by Kurdistan cash flow. We reiterate our BUY and NOK15 target price.DNO is a Norwegian exploration and production company focused on the Middle East and North Africa. Co. holds stakes in oil and gas blocks in various stages of exploration, development and production, both onshore and offshore, in the Kurdistan region of Iraq, Yemen, Oman, the United Arab Emirates, Tunisia and Somaliland.
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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