Jefferies upgrades Energean on improved risk-reward after its 2026 share weakness

Jefferies upgraded Energean to 'hold' from 'underperform' and increased its price target by 18% to 800 pence, citing an improved risk-reward balance after the stock’s year-to-date decline despite firmer commodity prices.

The brokerage noted that Energean has been 'something of an anomaly' among exploration and production companies in 2026, with the stock falling this year despite higher commodity prices.

Jefferies attributed the weak share price performance to Energean’s production profile: roughly 63% of its forecast 134,000 barrels of oil equivalent per day in 2026 is allocated to fixed-price gas sold domestically in Israel, reducing the stock’s sensitivity to rising commodity prices.

Energean, which is listed in both London and Tel Aviv, is scheduled to release interim results on September 9. Jefferies projects year-end 2026 net debt at $3.5 billion, slightly above the $3.4 billion consensus and the company’s guidance range of $3.25 billion to $3.35 billion, primarily due to continued investment in the next phase of development at the Karish gas field offshore Israel.

The brokerage said it revised its model for Israel-specific taxes, deferring the impact of the Sheshinski levy and incorporating a higher oil price scenario. These changes raised its net asset value estimate by 52% to 910 pence per share.

The magnitude of the increase, according to Jefferies, stems from Energean’s substantial debt load; in its valuation, net debt equals the value of all producing assets.

The revised 800 pence price target blends the net asset value calculation with an EV/EBITDA-derived target that declined 9%, reflecting higher projected year-end 2026 net debt. The EV/EBITDA multiple itself remains unchanged at 4.75x.

During its May trading update, Energean cut its 2026 production guidance by 10,000 barrels of oil equivalent per day, now expecting 130,000 to 140,000 barrels/day. The revision was largely attributed to a 41-day shutdown at the Karish field in April and May caused by geopolitical tensions.

The company also increased its capital expenditure guidance by $60 million, bringing the expected range to $800 million to $860 million.

Jefferies expects capital expenditure to drop significantly in 2027 once investment in the Katlan development is completed. Production should also rise year-on-year following the commissioning of the second oil train on the Karish floating production, storage and offloading (FPSO) vessel in July 2026, which raised total liquids processing capacity to 31,000 barrels per day from 18,000 barrels per day.

Jefferies also said it would seek fresh commentary on Energean’s diversification strategy, following the failure of a planned strategic entry into Angola.

In addition, Jefferies raised its price target for Energean’s Tel Aviv-listed shares to 32 shekels from 27.30 shekels.