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Ophir Energy to ‘outperform’ thanks to Schlumberger’s addition to Fortuna

Ophir energy tanker
Ophir is now rated 'outperform' by Credit Suisse, which sees 36% upside

The credibility of Ophir Energy Plc’s (LON:OPHR) Fortuna project has been significantly boosted by Schlumberger’s addition to the venture, so says Credit Suisse.

The Swiss bank today upgraded its view on the Africa focussed petroleum group to ‘outperform’ from ‘underperform’ and set a 100p target suggesting some 36% upside to the current share price.

It comes after Schlumberger agreed a partnership between Ophir and OneLNG- a joint vehicle of Schlumberger and India’s Golar – which will oversee the development of Fortuna, a major floating LNG project offshore Equatorial Guinea.

“The main barrier to Fortuna moving forward was Golar's lack of midstream financing, so the new ownership structure should allow Fortuna to move forward, as the new JOC should be more readily able to secure financing, given Schlumberger's bluechip balance sheet, and the fact that upstream resources can now be used as security,” Credit Suisse analyst Justin Teo said.

Teo added: “Discussions with lenders are at an advanced stage, according to Ophir, and it is unlikely the company would have made an announcement if it wasn't confident on the financing.

“Ophir has received interest from several potential off-takers, and two consortia have submitted bids for the upstream work, so the main uncertainty lies in approval from the government, in our view.”

Elsewhere Jefferies International powered up its recommendation for portable generator firm Aggreko Plc (LON:AGK), moving to ‘hold’ from ‘underperform’, whereas Credit Suisse is still bearish with its ‘underperform’ rating intact and the target lowering to 690p from 740p.

Peel Hunt lifts its target for Speedy Hire Plc (LON:SDY), to 50p from 36p, thanks to signs of revenue growth through the first half. Meanwhile, the broker also reduced its target for Majestic Wines Plc (LON:WINE) down to 300p from 440p. 

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