Jefferies has reaffirmed its preference for selected European oil and gas producers entering 2026, while cutting ratings on others where production growth and balance sheet trends no longer support current valuations, according to a note dated Wednesday.
The brokerage said European exploration and production stocks are trading, on average, at 92% of total net asset value, equivalent to an 8% discount, though valuation gaps across the sector remain wide.
Jefferies said stock performance is expected to diverge sharply in 2026 based on company-specific operational delivery rather than broad commodity trends.
Among Norwegian producers, Jefferies reiterated a “buy” rating on and raised its price target to NOK330 from NOK315, citing production growth and returns.
The brokerage said Aker BP remains its top pick, supported by organic production growth and dividend visibility. “Quality names capture upside & offer protection on the downside,” the analysts said.
Vår Energi also retained a “buy” rating with an unchanged NOK40 price target. Jefferies said the company continues to offer value through dividends yielding about 14%, though it favors Aker BP due to stronger production catalysts.
Vår Energi’s ability to meet its production target of around 400,000 barrels of oil equivalent per day in 2026 remains tied to performance at Balder, the report said.
Jefferies downgraded to “underperform” from “hold” and cut its price target to 680p from 930p, citing limited production growth and rising leverage.
The brokerage said Energean’s Karish gas field has delivered three full years of production, but 2026 guidance of 5.2 to 5.4 billion cubic meters a year falls below expected domestic gas demand of more than 7 bcm.
Net debt is projected to rise to $3.2 billion to $3.3 billion by the end of 2026 from $2.5 billion at the end of 2022.
“Flat is not enough for its production outlook,” Jefferies said, adding that dividend commitments and deleveraging needs could restrict future acquisitions.
In contrast, Jefferies upgraded to “hold” from “underperform” and raised its price target to 7p from 6p following a sharp rebound in the stock early in 2026.
The brokerage said Tullow’s performance in 2025 was marked by heavy underperformance, but recent oil price strength has improved sentiment.
Jefferies said the company’s outlook remains dominated by refinancing roughly $1.3 billion of senior secured notes due in May 2026.
The brokerage maintained “buy” ratings on several UK-listed producers, including , , , and . Harbour Energy’s price target was raised to 295p from 290p, while Serica’s target increased to 250p from 230p. Ithaca Energy’s target was lowered to 210p from 220p, though the “buy” rating was unchanged.
Jefferies said consolidation activity in the UK North Sea continues to benefit companies with clear acquisition strategies, while international exposure remains a differentiator.
The brokerage also highlighted continued buy ratings on and , noting growing international LNG exposure.