Lundin Energy (Hold, TP: SEK245.00) - Great assets, but needs discoveries
Great assets, but needs discoveries We initiate coverage with a HOLD and SEK245 target price, as we find the stock fairly valued at a 2022e P/E of 10.6x and implied long-term oil price of USD68/bbl. The company has a solid, focused portfolio with world-class assets in Johan Sverdrup (20% ownership) and Edvard Grieg (65%) that are continuing to deliver production growth. However, the current valuation implies additional growth is needed. Without the required near-term success, we see a risk that its lack of discoveries in recent years and potential production rollover in the mid- to late-2020s could come into focus.
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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