Berenberg initiates coverage on Kistos at 'buy'

Analysts at Berenberg initiated coverage on exploration and production outfit Kistos at 'buy' on Monday, stating the firm's portfolio was "ready to bloom".

Berenberg said it thinks Kistos can grow production by roughly 380% in 2021 to about 24,000 barrels of oil per day following its recent acquisition of a portfolio of assets from Tulip Oil in the Netherlands.

The German bank, which issued the stock a 495.0p price target, also stated low unit costs and "a supportive European gas price environment" had ensured that this production growth was forecast to be "highly cash generative".

Berenberg pointed out that Kistos has "a sector-leading scope one emissions profile", as well as a management team with "a strong track record of value creation".

"Our net asset value-based price target indicates circa 33% upside to the current price and Kistos is the cheapest company in the sector on cash flow multiples once through this initial phase of development; it is trading on 2024 EV/EBITDA of 1.2x, EV/DACF of 1.4x and a 45% FCF yield," said the analysts.