MOSCOW, 15 March – RIA Novosti . Goldman Sachs (GS) raised the target price of Rosneft's global depositary receipts (DGR) by 41% to $ 10, not only confirming a Buy recommendation, but also including Rosneft in the list of the most preferred investment targets in 2021, the company said in a statement.
Yield of FCF (free cash flow – ed.) And dividend yield of Rosneft are expected at the level of 15% and 10%, respectively. An important catalyst is progress in the implementation of the Vostok Oil project. Target prices for competitors were increased by an average of 18%.
The bank expects that, against the background of improving macroeconomic indicators, the profit and dividends of companies will grow, which, in turn, will improve the dynamics of their quotations. According to GS estimates, Rosneft is expected to have the highest dividend yield growth rate in 2021, 8 times to about 10%.
GS notes that Rosneft maintains one of the leading positions in the world in terms of maintaining the lowest production costs, which will ensure the ability to generate high FCF. According to GS, the reduction in specific emissions in the exploration and production segment and the possibility of further emission reductions through utilization of associated petroleum gas increase Rosneft's relative advantage over some other oil majors.
Bank of America Merrill Lynch also raised its target price for Rosneft GDRs today by 17% (from $ 7.7 to $ 9), maintaining a Buy recommendation and a place in the list of preferred investment targets in the EEMEA region (Eastern Europe, Middle East and Africa) …
The bank raised its long-term forecast for oil prices in connection with a decrease in reserves and the expectation of a recovery in demand – growth in oil consumption, according to the bank, is expected to be the strongest since the 1970s.
The bank notes that after the collapse in oil prices in 2016, 2018 and 2020, the sensitivity of the volume of shale oil production in the United States to a 1% increase in prices decreased by 2 times. If 5-8 years ago, a 1% increase in oil prices led to an increase in drilling in shale fields by 2%, now the growth is only 1%.
Meanwhile, in Russia, the resource base is growing significantly. The world's largest oil and gas discoveries in 2020 were made by Rosneft.
International consulting and analytical agencies – Wood Mackenzie and Westwood Global Energy – have come to the conclusion that Russia is the leader in hydrocarbon exploration after analyzing the data of mining companies at the end of 2020. According to Westwood's findings, the Russian Federation accounted for 70% of the oil and gas reserves discovered in the world last year. The three largest world discoveries of 2020 were made on the territory of Russia, all of them related to the activities of Rosneft in the Kara Sea and Taimyr.
Industry analysts believe that the discovery of the Zapadno-Irkinskoye field in Taimyr with recoverable oil reserves of over 500 million tons will support the resource potential of Rosneft's largest project, Vostok Oil.