DNO (Buy, TP: NOK18.00) - Exploration and M&A waiting game
We have cut our 2019–2021e EBITDA by 10–22% after lowering our oil price estimates, reducing our NAV to NOK22.9/share (23.9). However, the shares are still trading at an attractive P/NAV of 0.5x. News flow has been disappointingly scant YTD, but we see this changing given expectations of Baeshiqa exploration results by year-end and its M&A ambitions. We maintain our BUY on a strong FCF and 2019e P/E of 4.6x, but have cut our target price to NOK18 (21.5).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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