Jefferies lowers Brent oil price forecasts, downgrades Ophir Energy, Premier Oil
(ShareCast News) - Analysts at Jefferies revised their medium and long-term price assumptions for Brent oil lower, downgrading shares of Ophir Energy, Soco International and Premier Oil in the process.
The broker marked down its long-term assumption - for 2020 and beyond - for Brent by 18% to $70.0 per barrel.
Oil was now also seen lower in the short to medium-term; Jefferies marked down its 2018 oil price projection by 11% to $63.8 per barrel and that for 2019 by 21% to $67 per barrel.
"We believe the oil market is currently undersupplied and will remain so through 2017; however, we expect that the market will return to balance in 2018 as OPEC cuts expire and US production continues to grow."
Those changes drove a 21% reduction in total net asset values for Oil&Gas E&P stocks under its coverage.
Nonetheless, the peculiarities of each company in terms of their asset quality, operational delivery and balance sheets meant that on average the broker's target prices fell by a lesser 10%.
Even so, the broker downgraded its recommendations on Ophir Energy from 'hold' to 'underperform' and for Premier Oil from 'buy' to 'hold'.
In parallel, it cut its target prices for the pair from 95.0p to 75.0p and from 90.0p to 68.0p, respectively.
On Ophir and Soco International, Jefferies highlighted their "reliance on one dominant asset" whereas Premier Oil, Genel and Enquest´s producing fields and assets under development were not able to offset net debt if oil prices remained flat.