DNO (Buy, TP: NOK16.00) - Significant NCS value potential
With a solid NCS exploration track record, DNO has discovered net resources of over 135mmboe. We estimate a NCS production CAGR of ~10% throughout this decade, with additional upside potential if discoveries are sanctioned. Despite the Iraq-Turkey pipeline uncertainty, we expect sufficient cash flow to cover dividends until 2030, even if oil is sold locally at mid-USD30/bbl. We reiterate our BUY and have raised our target price to NOK16 (12)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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