Oil price expectations are on the rise Goldman Sachs reckons Petrofac Limited (LON:PFC) will be a key beneficiary from a pick-up in Middle East contracting through 2017.
Analyst Maria-Laura Adurno noted that this past year has been “very low” year for the London listed oil services group.
“Drilling activity (measured by rig count) has been consistently high in the region and we expect this trend to continue in 2017/18,” Adurno said.
“The level of contracts in the Middle East, however, has been low particularly compared with 2015, driven by delays in awarding contracts as well as projects retendering.
“In our view if Middle Eastern countries want to maintain production growth following the end of planned cuts for 1H17, they will require additional investments.”
The analyst says new investment in the region will translate to contract opportunities for Petrofac.
Goldman rates Petrofac as a ‘buy’ with a £10.65 price target, which implies some 20% upside to the current price of 884p per share.
Hunting Plc (LON:HTG), another of Goldman’s ‘buy’ rated picks in the sector, is given a 668p target suggesting 12% upside to its current price of 595p.