Often when you buy local the trade-off is price. Brits have made their choice for day-to-day shopping, choosing supermarkets over high-street greengrocers. When it comes to oil and gas, however, the local choice is also the cheapest.
Tip style
Growth
Risk rating
Medium
Timescale
Medium Term
Bull points
- Production is climbing
- Focus on "short payback" capex
- Clever deal-making
- Roomy margins
Bear points
- Lower gas prices this year
- Uncertainty around energy transition
Of the UK-listed mid-cap energy companies, Serica Energy (SQZ) is an inexpensive option. The North Sea-focused group sits on a forward enterprise value/Ebitda ratio of less than one times. By contrast, Energean (ENOG) trades on three times and Diversified Energy (DEC) – not a particularly pricey stock by any other measure – trades on almost five times. This is partly explained by its significant debt load, which boosts the enterprise value significantly.