DNB starts Okea with 'buy', deems risk/reward attractive

Okea ASA

11/04/2023 09:50

** DNB Markets initiates coverage of Norwegian
mid-to-late-life operator Okea  OKEA.OL  with a "buy" rating,
seeing its strategy "to find and extract value where others
divest" as compelling
    ** The analyst says the risk/reward is attractive, citing
the 12% dividend yield and expected strong free cash flow
(FCF)generation in 2023-24, resulting in a 28% FCF yield
        ** The broker says Okea is set for a strong production
growth in 2023 YOY after acquiring Wintershall assets in 2022,
which might more than double between 2022 and 2024, coming close
to its target of over 40,000 barrels of oil equivalent per day
(boepd)
    ** DNB highlights the operators focus on extending lifetime
of vintage fields, with the significant potential in its Draugen
and Brage fields of around 63 million barrels of oil equivalent
(mmboe), on top of its "decent" 101 mmboe baseline of proven and
probable reserves
    ** However, if there will be no further organic growth
acquisitions, the 2025 production decline should be addressed,
adds the broker, who in that case sees a negative FCF estimate
    ** The broker sets the target price for the stock at NOK 41

 (Reporting by Agata Rybska)
 ((agata.rybska@thomsonreuters.com))