The price of a barrel of Brent Crude dipped below $50 in January and plunged a good few of our oil explorers into crisis. But since then it’s recovered a little and is sitting at around $60 today. So is it time to pick up a few bargains amongst the oversold casualties? The City’s analysts seem to think so:
Premier
Shares in Premier Oil (LSE: PMO) are down 51% over the past 12 months to 159p, but there’s a clear majority amongst the tipsters who think we should be hoovering up the cheap shares now. In fact, out of 24 forecasting, 12 are bullish on Buy recommendations while only two think we should Sell — and the remaining 10 are staying Neutral.
Price targets are looking juicy too, with a recent average of 265p, and that’s a pretty nice 67% up on the current price.
Tullow
Tullow Oil (LSE: TLW) is very much in favour too, with 13 out of 32 forecasters urging us to Buy the stock and only four thinking we should Sell. That’s a smaller ratio than for Premier, of a little over three to one compared with six to one, and there’s a similar proportion Neutral on Tullow at 15 out of the 32, but it’s still a nice upbeat consensus.
There’s a recent target average of 508p, for a premium of 42% over the current price of 358p (down 55% over 12 months). The spread is wider for Tullow, so there’s a fair bit of uncertainty there.
Ophir
Heading to Ophir Energy (LSE: OPHR), we see more uncertainty with 10 out of 17 punters uncertain on a Neutral stance. And of those with firmer opinions, there’s a Buy to Sell difference of five against two. That’s the smallest ratio so far, of two and a half to one, so the market is clearly seeing greater risk.
Ophir shares have suffered the biggest fall over a year, of 57% to 138p, and the recent average price target of 178p suggests a weaker uplift too, of only 29%. Ophir is not in profit yet and is the hardest to evaluate, but it has plenty of cash and could be a nice pick if you relish a riskier prospect.
Cairn
Finally we come to Cairn Energy (LSE: CNE), and another strongly bullish consensus. Of a sample of 22 analysts, 11 think it’s time to Buy with only two suggesting we Sell. With a ratio of 5.5 to one, that’s almost as strong as Premier oil. Nine are Neutral
Cairn energy shares have had the best 12 months of the lot, with a fall of only 5% to 197p, but we’re looking at the weakest price target premium of the four stocks here. At 214p it suggests a rise of only 20% — but though that’s low compared to the others here, it’s still way above brokers’ targets for much of the rest of the FTSE.
Which to buy?
Are any of these actually worth buying? I’ve always though the best of our oil companies should come strongly out of the low-oil shake-up, and I’m pretty much with the tipsters on these four — a good bit risker than most sectors, but I’m convinced that now is the time for the brave to test themselves.