Latest market update sees brokers rally behind FTSE 250 oil and gas group Afren

28th January 2014

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A spate of analysts have come out in support of Afren following the group’s trading update this morning which highlighted a bumper year in 2013 for the oil and gas producer writes Philip Scott.

Following its market update today, which was released ahead of Afren’s full year results, analysts at Canaccord Genuity, Westhouse Securities and The Share Centre reaffirmed their ‘buy’ recommendations on the stock. While yesterday Liberium Capital, re-iterated its own upbeat sentiment towards the group.

The FTSE 250 listed group announced that revenues grew to $1.65bn, compared to $1.57bn the previous year, and operating cash flow was in excess of $1.1bn.

However the group, which operates across the oil business, from exploration and development through to production has not witnessed its shares perform of late, with the stock just 1% ahead of the past year.

But Helal Miah, investment research analyst at The Share Centre is optimistic following the report. He says: “These results were driven by a 14% increase in net production to 47,112 barrels of oil equivalent principally due to the Ebok and Okoro fields, offshore Nigeria.

“Further development works are due on these fields and others which should ensure that Afren is able to generate higher margins and double digit production growth for the next five years.”

This year’s net production is likely to be hit by shutdowns as part of the further development and platform installation works at Ebok and in Kurdistan and while the report revealed the company’s net debt has risen to $739m investors should not be alarmed.”It includes the restructuring of the debt profile to longer maturities and lower repayment costs,” notes Miah. He adds: “We recommend Afren as a ‘buy’ for higher risk investors prepared for some volatility.”

 

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