Broker snap: Action-packed year ahead for E&Ps, says Credit Suisse

28th Aug 2012 09:56

Credit Suisse has highlighted Ophir Energy as its focus list stock in its sector review of oil and gas explorers and producers (E and Ps)."We continue to favour select E&P names in Europe. The emphasis is on the 'E' that provides for uncorrelated returns via the drillbit, as activity looks set to accelerate," the broker said."The potential for re-rating is material, and importantly the drilling has the potential to open new geological plays with a number of de-risked opportunities. Balance sheets are healthy, which not only improves the risk profile, but also allows for timely drilling activity. Oil market fundamentals remain robust, supporting recent corporate/asset deals."Credit Suisse says that the following 12 months should see important drilling activities in key exploration "hotspots" in several frontier regions (onshore/offshore Kenya, pre-salt Gabon/Namibia and Mauritania) and in areas where there have been recent industry successes (French Guiana, Barents Sea and Tanzania)."As for Ophir, the broker has maintained its 'outperform' rating on the stock, highlighting material near-term exploration programmes in Tanzania, Kenya and Gabon pre-salt as well as a strong balance sheet. It also reckons that Ophir remains a potential M&A candidate given the "strategic nature of its asset portfolio". Credit Suisse has made the following rating/target price changes for the following UK-listed stocks:Afren: downgraded from 'outperform' to neutral, target price cut from 185p to 170p.Cairn Energy: 'neutral' rating kept, target cut from 350p to 362p.Dragon Oil: downgrades from 'outperform' to neutral, target cut from 868p to 755p.EnQuest: 'neutral' rating kept, target cut from 158p to 140p.Faroe Petroleum: 'outperform' rating kept, tagged cut from 247p to 210p.Genel Energy: 'outperform' rating kept, target cut from 1,180p to 1,138p.Ophir Energy: 'outperform' rating and 930p target kept.Premier Oil: 'outperform' rating kept, target lifted from 533p to 540p.Rockhopper: 'neutral' rating kept, target cut from 365p to 324p.RusPetro: 'outperform' rating kept, target cut from 345p to 333p.SOCO: 'underperform' rating kept, target cut from 352p to 345p.Tullow Oil: 'outperform' rating kept, target cut from 1,730p to 1,650p.BC