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Lundin Falls as Nomura Prefers Rival Producers: Stockholm Mover

Lundin Petroleum AB, a Swedish oil and gas company, fell for a fifth day out of six in Stockholm trading after Nomura Holdings Inc. said it prefers the shares of rival oil producers and cut its recommendation on the stock.

The shares fell as much as 2.4 kronor, or 1.7 percent, to 137.5 kronor, the steepest decline since March 19. Lundin Petroleum dropped 1.2 percent to 138.3 kronor as of 10:29 a.m. local time, valuing the company at 44 billion kronor ($6.75 billion). The stock has fallen 2.8 percent in the past week.

Nomura cut its rating on Lundin to neutral from buy, saying it sees limited volume growth until production at the Edvard Grieg field starts in 2015. Cash multiples “are seen remaining at relatively elevated levels,” Nomura said, setting a 12-month share price estimate of 155 kronor a share.

“With an absence of meaningful production growth until Edvard Greig comes on stream in 2015, we prefer Premier Oil and Dragon Oil for continuous production growth at what we consider to be more attractive valuations,” Tom Robinson, an analyst at Nomura in London, wrote in a note to clients today.

Lundin’s resource unitization at the Johan Sverdrup field could also be negatively affected by more successful appraisal drilling at its PL265 well, of which it owns 10 percent, compared with the 40 percent it owns at the PL501 well, Robinson said. Lundin said last month that its mean estimate for resources in license 501 would probably be within the lower half of its 800 million to 1.8 billion barrel range.

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