Harbour Energy PLC (LSE:HBR) has received a bullish write-up from the US broker Jefferies following the completion of the asset acquisition from Wintershall Dea.
Describing it as "transformational", Jefferies says the deal has created a virtually unique "large, global independent oil & gas company" investment case with an expected investment grade balance sheet, FTSE100 inclusion & "broad set of growth options".
Crucially, it also reduces its exposure to the UK North Sea and its problems, says Jefferies, and makes it one of the big three players in European exploration and production alongside Norway-focused Aker BP and Vår Energi.
Wintershall Dea is also Harbour’s fourth material M&A transaction since 2017 (each roughly two years apart), which the bank sees as part of a coherent strategic growth plan that has also included, operational improvement after each deal, balance sheet deleverage and material direct shareholder returns.
“All of which, crucially, sets the company up for the next potential growth deal.”
Buy with a 400p price target is the recommendation.
Enquest, Serica Energy and Ithaca, Harbour’s peers, are yet to “break free” from the North Sea adds Jefferies.
Serica Energy PLC (AIM:SQZ) has been affected by partner NEO delaying the Buchan development in the North Sea due to the current tax uncertainty.
But one unexpected boom from that, Jefferies suggests, is that it now has more free cash to look for acquisitions elsewhere. Buy with a reduced target of 165p, from 225p previously, is the view.
Enquest PLC (AIM:ENQ) is a hold at 14p, down from 17p, due to its M&A plans being less developed thas Harbour though Jefferies notes its decommissioning leadership and energy transition credentials.
Ithaca has no recommendation.