Oil & Oil Services
Equity Research - 13 January 2020 06:56 CET Oil & Oil Services Q4’19 reports likely to be mixed Big differences from company to company 2020 is likely to be another stock picking year We highlight 5 large caps and 3 small caps Akastor, Aker ASA, Aker BP, Aker Solutions, Archer, Borr Drilling, Equinor, KOG, DRLCO, Gradual, but small improvements in fundamentals Noreco, Ocean Yield, Odfjell Drilling, PGS, We expect the Brent oil price to trade near the USD 65/bbl level in 2020 Polarcus, Seabird, Subsea 7, TGS Nopec and offshore exploration and production (E&P) to grow 5%. In other words, we forecast only modest improvements in fundamentals, similar to the situation experienced in 2019. Company-specific news likely to drive share prices in 2020 BW Offshore, DNO, EMGS, Kvaerner, Huge differences in share price performance were prevalent among and Lundin Petroleum, Magseis, NODL, oil service shares in 2019. Given our view on 2020 (only modest general Prosafe, Seadrill improvements in fundamentals), we think company specifics again will be the key drivers for share prices. In general, our top picks have the following characteristics: strong balance sheets, strong market positions, ABGSC estimates are above consensus, improving company specific and positive free cash flow. Our best ideas The following companies are our top picks, all rated BUY ‒ Aker BP (with Reporting dates: Q4'19 JS, 2020 will be year of de-risking and FCF focus, ~8% 2021 dividend PGS 30/01/2020 yield is likely too high); Aker ASA (its industrial holdings like AKERBP, Lundin
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