A new price target of 300p sees some 55% upside to the current price of 203.6p, though the American bank also highlighted that the ‘bull case’ has a “path to 500p”.
Analyst Sasikanth Chilukuru, in a note, said that at the current price the market is only pricing in 60% of the Senegal project’s value and doesn’t factor in anything for the group’s Vedanta stake.
Cairn shares were up 6.46p or 3.3% changing hands at 202.86p.
Financial results due Tuesday
The oil firm releases its results tomorrow, and investor attention will be on the new field start-up and cash flow growth.
Premier reassured on the jointly owned Catcher field - Cairn owns 20% of the field, which is expected to produce some 60,000 boepd gross by April. Now, the focus will be on Kraken.
The heavy oil field is Cairn’s other flagship field development, though it experienced teething problems, so investors will be keen to see positive production stats and operational commentary.
Set to reach production targets
Deutsche Bank analyst David Mirzai, in a recent note, highlighted that Kraken “appears set to reach its revised production targets”.
“Despite start-up issues, the Kraken field appears set to reach its revised production targets, which added to the Catcher field ramp-up should help Cairn to generate >$250m of operating cash flow in 2018,” Mirzai added.
Any update on the large scale SNE development in Senegal will also be welcomed, as this project represents the most sUBStantial potential catalyst. In terms of the financial results, UBS analyst Amy Wong expects earnings (EBITDAX) of US$10mln, an operating loss of US$127mln and a net loss of US$90mln.