Jefferies upgrades Enquest, boosts target price

Analysts at Jefferies upgraded their view on shares of Premier Oil even as they marked down their medium-term Brent oil price deck assumptions.

In their view, the improvement in Premier was accelerating given multiple recent events including a production increase, Catcher plateau increase, Zama discovery size increase, Tolmount funding agreement and the Wytch farm asset sale.

That combination of events led the broker to boost its target price for the shares by 32% to 90.0p, even in the face of its downward price-deck revisions for Brent oil.

Jefferies took down its 2017 Brent price projection from $55 a barrel to $52, that for 2017 from $64 to $57 and that for 2019 from $67 to $60.

In particular, the broker emphasised that, unlike at other levered UK peers, Enquest's debt refinancing was now complete.

Furthermore, and acting as a catalyst, ramp-up at Catcher was ahead and after just one well the Zama discovery in Mexico - at 600bn barrels of oil - appeared simply "world class".

In the same research note, analysts Mark Wilson, Niki Kouzmanov and Alexander Ohlman downgraded their recommendations on Enquest and Tullow Oil from 'buy' to 'hold'.

To back up their recommendation on the former, they pointed to the impact on its valuation from the Kraken FPSO topsides, reminding clients of how Tullow had proceded to an "unexpected" rights issue in the wake of a weaker performance at its TEN field.

As for Tullow's own refinancing, they simply moved back to "modeled" valuation.

The analysts cut their target prices for Enquest's shares from 64p to 30p and on Tullow from 250p to 155p.