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Brokers: Kurdistan lift for Genel, Gulf Keystone says Barclays

Published: 12:46 01 Feb 2016 GMT

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Crude’s modest rally last week has prompted a wave of notes from the City’s oil specialists.

Those companies operating in Kurdistan also got a lift today on new payment terms from the Kurdistan Regional Government.

Genel (LON:GENL) rose 5% and Gulf Keystone (LON:GKP) 15% on the news, which broker Barclays said was a positive for the companies in the region.

A move to payments under the PSC terms (rather than flat US$30mln gross payments to the Tawke and Taq Taq partnerships) could reduce monthly payment levels at current oil prices, but this impact may be offset by the start of payments to reduce arrears.

At end 2015 Genel’s receivable balance was US$400mln.

Payments are to be made monthly within 10 working days of month-end, setting expectations for a first payment under the new structure by 10 February. 'Overweight' on both Genel and its Tawke partner DNO, said the broker.

HSBC meanwhile is still a buyer of Tullow Oil (LON:TLW) even though it has cut it price target to 210p (from 310p) on lower oil price assumptions.

Tullow is a good play on an oil price pick up suggests the broker. The start-up of TEN in the summer is key but Tullow is in a relatively solid financial position even if it did end 2015 with US$4.0bn of net debt.

Nomura has put Premier Oil (LON:PMO) forward as its geared recovery play and is a buy when it returns from suspension following the acquisition of Eon’s North Sea assets. Plenty of people agreed as the share price doubled when trading got underway this morning as Premier tweaked the deal so that it now cost US$135mln but was not a reverse takeover.

The assets Premier is buying are located in the Central North Sea, West of Shetlands and the Southern Gas Basin.

Elsewhere, UBS has had its fill of Just Eat (LON:JE.) where it says public perception is not strong enough to withstand competitive threats. Coverage starts with a ‘sell’ rating and 330p price target.

Pharma contract research group Ergomed (LON:ERGO) delivered 25% growth in revenues in 2015.

Based on Stifel forecasts, it trades at a 17% discount to its CRO peers, despite its superior growth and not including the added value in its co-development portfolio.

A 281p valuation reflects both these elements of the business and provides 67% upside to the current share price. Buy says the broker.

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