Lundin Petroleum (Hold, TP: SEK215.00) - High quality, but fairly valued
Lundin reported a strong Q3, but with the share price up 15% in two weeks, and closing at an all-time high today it is time for a breather in our view. Our P/NAV is 116%, which is a 5-year high, and the implied oil price is cUSD80/bbl. We still like Lundin Petroleum for its quality asset portfolio, strong exploration record in Norway, and the upside potential we see to its key Sverdrup and Grieg assets, but we now consider it fairly valued. We have thus downgraded the stock to HOLD (BUY) but raised our target price to SEK215 (196).Lundin Petroleum is an oil and gas company. Co. has a global portfolio of assets with two main areas located in Norway and South East Asia. As of Dec 31 2014, Co. held close to 70 licences in Norway, with activities across exploration, appraisal, development and production. Co. also operated within several geographical areas, including France, Netherlands, Malaysia, Indonesia, Russia, Sweden and other countries.
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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