OKEA (Buy, TP: NOK23.00) - Set for strong sales and cash flow
Ahead of the Q1 report, due around 07:00 CET on 29 April, we forecast net production of ~33kboed and EBITDA of USD189m (no reliable consensus). We expect a meaningful overlift position and working capital release in the quarter, with USD69m in FCF, increasing OKEA’s net cash position to USD120m (NOK12/share or ~65% of current market cap). While we still forecast FCF to be negative in 2025–2026 due to high investments in new developments, we continue to find the long-term case attractive given a P/NAV of 0.48x. We reiterate our BUY and NOK23 target price.Okea ASA is a Norway-based oil company engaged in the oil and gas exploration and production industry. The Company contributes to the value creation on the Norwegian continental shelf with development and operation systems through the utilization of the result of previous and ongoing exploration activities in order to bring undeveloped oil on stream in strategic cooperation with service companies. Its services do not involve the exploration for petroleum. The Company operates an office in Trondheim, Norway.
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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