DNO (Buy, TP: NOK13.10) - Weak Q4
Q4 adj. EBITDA was 30% (USD27m) below consensus, on high exploration cost and weak revenues. Cash generated from operations (WC adj.) was 22% below our estimate. The 2018 capex guidance of USD150m is in line with our estimate, but 2018 expex guidance of 35% above consensus seems to be up more than 300% YOY. We expect a negative share price reaction of 2–4%. The Q4 presentation is scheduled for 10:00 CET (www.dno.no).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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