Vår Energi (Buy, TP: NOK40.00) - The road to 2030
At its Capital Markets Update in mid-March, we believe Vår Energi presented a viable plan to sustain production above 340kboed until 2030, with upside potential to our estimates if exploration proves successful. The company is set to generate cUSD1.1bn in annual FCF in 2025–2030e, implying that the current ~13% dividend yield is covered by FCF. As investors gain more confidence in Vår Energi’s long-term production outlook, we see the potential for a repricing towards peers on dividend yield, implying >20% upside potential from today’s close. We reiterate our BUY and have raised our target price to NOK40 (37) on the increased NAV and higher visibility.
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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