Broker snap: Cairn upgraded on Greenland potential

28th Mar 2011 10:54

UBS upgrades Cairn Energy from 'neutral' to 'buy', as it is encouraged by the potential from a number of prospects in Greenland.The target price for the Edinburgh-based oil and gas group is raised from 440p to 510p, a 20% (85p) premium to net asset value (NAV) for what the broker thinks will be the likely risked value of four prospects Cairn plans to drill in the third quarter."Given the higher chance of success on the smaller prospects on the Lady Franklin/Atammik blocks, we assume that Cairn drills the two prospects it outlined in its presentation, plus two 1bn barrels of oil equivalent prospects in West Disko, this would add 83p to our 423p NAV," UBS said.The broker confirms its positive stance, seeing upside potential between now and an announcement of resource estimates in May, before drilling in June.BC