12:11 CET on 26 July 2019 DNB Markets

Downside risks to our investment case.
Oil prices fall below our estimates.
Limited future exploration success.
Irregular payments from the KRG.
Downward revision of Tawke reserves.

DNB Markets investment case and how we differ from consensus.
Using consensus numbers across all companies DNO is trading at a P/E of 5.4x, which screens as the lowest P/E multiple for 2019e in the OSEBX.
We consider DNO well positioned for solid cash generation in the next few years, forecasting an average free cash flow yield for 2020-21 at 20%.
We consider the cash position solid opening up higher dividend and potential buy-back programmes given the discount to NAV currently.

Upside risks to our investment case.
We expect DNO to continue its exploration success in Kurdistan and prove additional resources at Tawke.
More M&A activity in the oil industry in Kurdistan, including attractive deals for DNO.

Most attractive P/E in Oslo Looking at the P/E multiple of 5.2x for 2019e and 4.6x for 2020e, we find this attractive on a relative basis versus other Norwegian companies. Versus the 57 companies in the Oslo Stock Exchange Benchmark Index, DNO is trading at a 5.4x P/E on consensus numbers, which is the lowest in the index, as shown below, which lists all the companies with a 2019e P/E below 50x on consensus numbers, and with positive EPS.

Source
DNB Markets