Deutsche Bank (DB) lifted its price target on Noble Energy Inc. (NYSE:NBL), saying it sees improving clarity from the Eastern Mediterranean over the coming 6-12 months supporting a path to $130/share, 36 percent potential upside.
The path to monetization of significant natural gas discoveries (~30 Tcf basin wide) is opaque to the market and driving a higher than normal discount rate, the bank said. The approval of Israeli exports, future domestic developments and Cyprus should all narrow the current gap to NAV, DB added.
"With around 16 Tcfe of discoveries in the basin, the development timeline for NBL is key to our view of value. We think consensus has grown wary of this story and underappreciates the timing of the project backlog and value implications," the bank wrote. "We think the street views the region as $15-17/shr, we outline a roadmap to $30/shr + of value."
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Despite an attractive backlog of high margin, highly visible projects over the coming decade, NBL continues to enjoy optionality surrounding exploration, DB wrote. Three oil prospects are in process, the Gunflint appraisal well, the Leviathan deep exploration well (a 0.6-3.7 Bn bbl prospect) and an additional West African prospect.
The bank has a "Buy" rating on the stock.
NBL shares gained 1.69 percent to $97.06 on Friday. Over the past year, shares have been trading in the range of $65.91 to $105.46.