Cairn Energy raised to 'buy' by Citigroup; says Senegal resource potential under-appreciated

10th Jun 2015 12:07

Citigroup upgraded Cairn Energy to 'buy' from 'neutral' and raised the price target to 250p from 207p.It said the company's resource potential offshore Senegal is under-appreciated, while the stock's valuation looks attractive."We believe Cairn's emerging resource position offshore Senegal can be developed at break-even economics of less than $40 a barrel," said Citi.In addition, it said the shares discount little value for Cairn's remaining 9.8% stake in Cairn India, which could be a source of further upside if it wins its international arbitration case."The new $575m debt facility and sale of a 10% stake in the Catcher project provides Cairn with sufficient liquidity to fund its share of ongoing UK developments (Catcher and Kraken) and planned 2-year Senegal drilling programme," noted Citi.Based on the bank's conservative start-up assumption of third quarter 2017 for both the Kraken and Catcher projects, it forecasts Cairn with cash of $103m at the end of 2017.At 12:17, the shares were up 3.9% at 188.80p .