“Welcome news from Opec” says Atif Latif, Director of Guardian Stockbrokers

DirectorsTalk caught up with Atif Latif of Guardian Stockbrokers who said the following: “The news from OPEC is welcome news for the oil / oil service companies yesterday. Many have suggested that the oil price would continue to remain in the low $37 – $40s as a base case but with the view that global demand will slowly start to pick up on the demand side. The concerns regarding a rebalancing remain overdone with the drop in crude reserves and the WTI / Brent closure could lead to oversupply issues being less of an issue.  With oil near an 11 year low, many companies have started to cut dividends, re price current projects and more importantly shift portfolios to manage debt levels and with equity re basing and pricing pressures of FCF started to stabilise we are now seeing absolute value in the O&G listed names. Although we expect more pain in the coming months as an absolute value play they are now investable where the catalyst for M&A is now a viable option as short term price risk will be outweighed by higher value over the medium term as rights issues can be avoided led by a full rebalance. “