Enquest PLC is “all-time” cheap on Cavendish’s numbers, with the broker initiating coverage at 'Buy' and setting a 26p price target that implies 91% upside to the 13.6p share price.
Cavendish argues the North Sea and South-East Asia producer “has never offered better value” in its 15-year history, pointing to low EV/EBITDA multiples and what it describes as sustainable free cash flow alongside a newly established dividend.
The analyst case centres on balance-sheet repair translating into shareholder returns. Cavendish notes EnQuest has generated more than US$1.3bn of free cash flow since 2021 and has already begun returning cash, having “paid its maiden dividend in June last year (yielding c5%).” On forecasts of around US$510m FY25E EBITDA, the broker calculates an EV/EBITDA multiple of 1.5x, positioning the stock as materially undervalued versus peers and intrinsic value.
Cavendish also frames EnQuest as a consolidator for late-life assets, arguing its operational track record and growing decommissioning capability create a competitive edge as mature basins age. It highlights financial “firepower” with cash and undrawn facilities totalling more than US$675m, plus an upscaled US$800m reserve-based lending facility that it says supports growth ambitions.
Beyond organic work at producing hubs such as Kraken and Magnus, Cavendish points to portfolio options including the DEWA complex in Malaysia, new country exposure in Brunei and Indonesia, and longer-dated heavy oil projects at Bentley and Bressay.
On the UK backdrop, Cavendish flags the proposed Oil & Gas Price Mechanism as a more predictable successor to the Energy Profits Levy, while cautioning timing remains political