Daily ShareChat: New Zealand Oil & Gas

Upgrades to oil price forecasts by his firm's sister company Credit Suisse has led him to upgrade his forecasts for New Zealand Oil & Gas, says Jason Familton, an analyst at First NZ Capital.

He has raised his forecast net profit for the year ending June by 17.7% to $34.9 million and his 2012 forecast by 33.8% to $46.8 million.

Credit Suisse is now assuming the long-term price of crude oil will be $US90 a barrel (NZ$117.31), up from $US80 a barrel previously.

He has also raised his sum-of-the-parts valuation of the stock to $1.19 from $1.06 previously.

"Without the prospect of an immediate upside catalyst to our valuation for NZO from exploration, the investment case for NZO comes back to the operational performance of Tui and Kupe and the price of crude in New Zealand dollars which has continued to be stronger than expected," Familton says.

"The focus from the market will also continue to be on NZO utilising its cash balance successfully with the prospect of some new exploration acreage outside New Zealand being announced shortly," he says. The market is also likely to focus on progress by Pike River Coal's receiver.

Without progress on the Kaupokonui prospect or confirmation of new exploration acreage being acquired, "we struggle to find a near-term calayst for the stock."

Rating: Outperform (from Neutral).

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