OT: The Lundin Oil peer group - UK oil exploration companies
The Scotsman, July 4
INVESTORS in the UK's oil exploration companies have recently been striking it richer amid little sign of the high oil price drying up, but many analysts believe market valuations are still playing catch-up.
Takeover speculation has been focusing on the former merger candidates, Enterprise Oil and Lasmo, as attention has turned from consolidation in the American market to cheaper UK targets, and the continuing gap between share and oil prices serves to highlight their attractiveness. The Italian group, Eni, has already expressed its desire for a UK deal.
...
Forecasts for average oil prices have been put at about $24 a barrel for this year and $22 next year, but Enterprise's share price is discounting a price closer to $18 a barrel.
Further upside should come from an expected 40 per cent increase in Enterprise's production over the next three years and the weakening of sterling against the dollar, but the company's relative price is close to that of two years ago when the price of oil was half of what it is today.
Exploration companies' market valuations are always likely to suffer greater swings than larger integrated plays, but now that these companies have taken action to reduce their operating costs, and the forecast is set fair for buoyant oil prices, the conditions are right for Lasmo, and particularly, Enterprise to boost their ratings in the market. |
