http://www.digitallook.com/cgi-bin/dlmedia/news.cgi?username=&ac=&view=full&story=22903838
Cairn Energy raised to 'buy' by Citigroup; says Senegal resource potential under-appreciated
Date: Wednesday 10 Jun 2015
Citigroup upgraded Cairn Energy to 'buy' from 'neutral' and raised the price target to 250p from 207p.
It said the company's resource potential offshore Senegal is under-appreciated, while the stock's valuation looks attractive.
"We believe Cairn's emerging resource position offshore Senegal can be developed at break-even economics of less than $40 a barrel," said Citi.
In addition, it said the shares discount little value for Cairn's remaining 9.8% stake in Cairn India, which could be a source of further upside if it wins its international arbitration case.
"The new $575m debt facility and sale of a 10% stake in the Catcher project provides Cairn with sufficient liquidity to fund its share of ongoing UK developments (Catcher and Kraken) and planned 2-year Senegal drilling programme," noted Citi.
Based on the bank's conservative start-up assumption of third quarter 2017 for both the Kraken and Catcher projects, it forecasts Cairn with cash of $103m at the end of 2017.
At 12:17, the shares were up 3.9% at 188.80p .
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