LONDON (ShareCast) - (ShareCast News) - Oil producer EnQuest's shares rose on Friday as Canaccord Genuity said the company is "one of the most attractive plays in the sector".
EnQuest on Thursday reported a drop in full year earnings before interest, tax, depreciation and amortisation (EBITDA) to $465m from $581m in 2014, beatings expectations of $408.

The decline came as it was forced to write down $626m on the value of some of its assets due to the recent slump in oil prices.

However, EnQuest said it expects to benefit on a change in UK legislation giving oilfield operators tax relief on decommissioning costs when they sell an asset will speed up such deals in the North Sea.

EnQuest also said it would cut costs this year to address the impact of lower oil prices on revenue. The company expects operating costs to fall to $25-27 per barrel this year, down from $29.7 per barrel in 2015.

"The organic direction of travel for the company is impressive and clearly it is doing a very good job of addressing all the issues within its grasp," said Canaccord analyst Charlie Sharp.

"As a highly geared stock, it is also benefiting from the recent oil price strength. For those willing to ride this positive oil price direction, we believe Enquest is one of the most attractive plays in the sector."

However, Sharp warned on the current scale and near-term direction of net debt and its impact on equity value.

Canaccord also urged caution on production delivery uncertainties regarding EnQuest's North Sea Kraken development.

The broker maintained its 'hold' rating but raised its target price to 20p from 16p.

Shares jumped 13.55% to 21.58p at 1032 GMT.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE