DNO (Buy, TP: NOK13.10) - Looking for Peshkabir update
We are in line with consensus on Q4e EBITDA, but believe market expectations are far too low on 2018e capex. We still find the medium-term risk/reward attractive, with our NAV-based target price of NOK13.1, our bear-case fair value (with conversion of PSCs to TSCs) of NOK6.7/share, and our bull-case fair value (with Peshkabir being successful) of NOK17.9/share. Noting that DNO has been paid by KRG in 16 consecutive months, we reiterate our BUY recommendation. The Q4 results are due at 08:00 CET on 8 February.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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