With the exception of the odd outlier London’s oil stocks basically track the Brent crude price, so say the analysts at Jefferies.
Analyst Mark Wilson says that exploration success or failure is one of the main factors that see stocks deviate from the commodity price trend – others include production growth or decline, or balance sheet matters.
The outliers for 2017 identified by Wilson were Cairn Energy PLC (LON:CNE), Jefferies ‘top pick’, as well as Tullow Oil plc (LON:TLW) and Premier Oil PLC (LON:PMO) which have to navigate separate slower than anticipated field start-ups.
Wilson highlights that Cairn will see share price catalysts in Senegal, where a new phase of appraisal gets underway this year, whilst stakes in two new North Sea fields add further value creation.
Jefferies sees Tullow as ‘underperform’, with a 250p price target (currently 326p), whilst Premier Oil is still seen as a ‘buy’ with a 116p price target (currently 92p).
Also Kurdistan based Genel Energy PLC (LON:GENL) is downgraded to ‘underperform’ with a 76p target (currently 85.5p).