DNO (Buy, TP: NOK13.00) - A classic buy the dip
DNO was hit hard (down 10%, or NOK1.0) on its weakish Q4 results. However, with only an insignificant impact on our NAV, we consider the share price drop a particularly attractive buying opportunity. We see continued payments from the KRG and a reserve update on the Peshkabir field as potential catalysts. With USD430m in cash on the balance sheet, and as the shares are trading at an implied oil price of cUSD50/bbl, we expect DNO to consider doing share buybacks, which would be highly NAV accretive and share price supportive on our estimates.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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