DNO (Buy, TP: NOK16.00) - Room for higher distributions
We expect DNO to improve its net cash position to USD260m at end-Q3, supported by higher production QOQ. Trading at a P/NAV of 0.51x (versus a ~0.6x average since 2015), we believe there is upside potential in the stock and that a higher and more stable dividend could narrow the gap to its historical valuation. We reiterate our BUY and NOK16 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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