North Sea focussed oil field developer EnQuest (LON:ENQ) is a resilient company, but, equity investors will need to see the crude price back up to US$70, according to City broker Numis.
Analyst Sanjeev Bahl, in a note, said: “The EnQuest equity story is reliant on an oil price recovery.
“Equity value remains highly leveraged to our long term oil price assumption with an estimated equity breakeven of US$70 per barrel assuming minimal incremental opex and capex cost deflation.”
“A combination of relatively high financial and operational leverage means that small changes in long term oil price assumption have a material impact on net asset value (NAV).”
Bahl says he prefers peers, both Tullow (LON:TLW) and SOCO (LON:SIA), though he acknowledges that if oil price did indeed recovery EnQuest – due to its leverage – would be the oil stock that would see the biggest impact.
The analyst also highlighted that EnQuest expects the delayed Alma/Galia operation to achieve ‘first oil’ in a matter of weeks.