Several oilers get a mention in today's SMH. DLS included as a 'buy' along with STO and a few others. WPL not mentioned. Prev i didn't realise the Apache assets bought by WPL are CSG in BC Canada. I thought they were crude assets. Have changed my sentiment on WPL and STO. Anyone else buying DLS?
"A number of energy companies have fallen into bargain territory, say analysts, given the massive sell-off in recent weeks.
Origin Energy, now trading around $10.70 from a high of $16.12 in September, and Santos, now at $7.26 from a high of $15.19 in August, have both come under the spotlight.
UBS and Citi have placed a "buy" on Origin.
UBS called Origin "A Christmas bargain", predicting its price would go to $14.42 in a year. "We believe Origin is undervalued on UBS estimates," said UBS in a recent research note. "We estimate intrinsic value could rise to around $20 per share by 2018 versus the current share price of below $11 a share, largely driven by the value of the Australia Pacific Liquified Natural Gas project as we draw nearer to start up."
Citi noted that Origin had increased its liquidity buffer by adding $750 million to its syndicated loan facilities. "In the current market environment, we think it is better to be safe than sorry so adding to the liquidity buffer is prudent."
Citi also placed a buy on Santos. "As long as Brent crude is trading above $US79 a barrel with an Australian dollar at 80 US cents in 2017, we think Santos can maintain its current investment grade rating given current criteria."
Ord Minnett, meanwhile, has recommended a buy or speculative buy on a range of oil producers and coal seam gas explorers.
Ord Minnett have placed a "speculative buy" rating on coal seam gas explorers Comet Ridge, Kinetiko and Tibu and oil explorer Target. The projected gains on these stocks ranged from 84 per cent for Target to 900 per cent for Kinetiko.
Oil producers Cooper, Drillsearch, Senex, and coal seam gas explorer Strike were given a "buy" rating. Projected gains ranged from 38 per cent from 38 per cent for Cooper to 138 per cent for Strike. Oil producer Horizon was rated a 'hold'.
'Our updated base case incorporates…Brent oil prices of $US82 a barrel and $US88 a barrel in 2015 and 2016 (previously $US97 and $US94).
'We estimate most of our coverage universe can accommodate the near term revenue impact with minimal to moderate stress at those prices.
'However Target and Kinetiko, and possibly Horizon, may require additional equity.'
