Meren Energy (MER.TO) has received a renewed Buy recommendation from Arctic Securities, with the broker increasing its share price target to SEK 21 from SEK 20, highlighting the company’s organic growth opportunities in Nigeria and Namibia.
The latest research note from Arctic Securities, published on 16 August 2026 and written by research analyst Daniel Stenslet, points to several potential developments that could support Meren Energy’s longer-term outlook.
With a share price of SEK 15.30 at the time of the report, the revised target represents potential upside of 37.3%. However, the broker also highlights delays to drilling activity in Nigeria and outstanding negotiations surrounding the Venus project in Namibia.
Meren Energy Q2 2026 Results Show Operational Resilience
Meren Energy’s second-quarter performance provided several encouraging financial indicators, including revenue and operating profit that exceeded market expectations.
The company reported net working-interest production of 27,100 barrels of oil equivalent per day (boepd), approximately 2% ahead of Arctic Securities’ forecasts.
Revenue benefited from the timing of oil cargo liftings, while operating profit was supported by stronger-than-expected revenue and lower depreciation and amortisation.
Q2 2026 Financial and Operational Highlights
- Net production: 27,100 boepd, approximately 2% above Arctic Securities’ estimate.
- Revenue: USD 197 million, approximately 10% to 20% ahead of the broker’s estimates and consensus expectations.
- Operating profit (EBIT): USD 80 million, around 4% above Bloomberg consensus and approximately 20% ahead of Arctic Securities’ estimate.
- Average realised oil price: USD 92.80 per barrel across two cargo liftings.
- Net interest-bearing debt: USD 212 million, with the difference from the broker’s expectations mainly attributed to the timing of cash tax payments.
- Capital expenditure guidance: Reduced by approximately 10% to 15% for 2026, reflecting the rescheduling of drilling activity in Nigeria.
- Financial guidance: Increased, primarily reflecting higher oil prices.
Although the quarterly figures were broadly neutral from an operational perspective, they demonstrated the earnings contribution from Meren Energy’s producing assets.
Nigeria Drilling Programme Offers Potential Production Support
Nigeria remains central to Meren Energy’s near-term operational plans.
The company expects two drilling rigs to return during the fourth quarter of 2026, following an unusually prolonged pause in drilling activity. These operations are expected to continue into 2027.
At the Agbami field, planned activities include infill drilling alongside appraisal of the neighbouring Ikija discovery.
Meanwhile, operations at Akpo and Egina are expected to begin with exploration of the Akpo Far East prospect.
Arctic Securities estimates that Akpo Far East contains approximately 23 million barrels of net unrisked prospective resources. The prospect is situated around five kilometres from the existing floating production, storage and offloading vessel.
If exploration proves successful, the broker believes the discovery could potentially be connected to existing infrastructure within two years.
Such developments could help stabilise and rebuild Meren Energy’s Nigerian production base, although their eventual contribution will depend on drilling results, investment decisions and project execution.
Looking further ahead, Preowei and Egina South provide additional development possibilities.
The broker now anticipates a potential investment decision on Preowei in early 2028, with progress dependent partly on the results of the Egina South appraisal well scheduled for 2027.
Namibia’s Venus Project Remains a Major Development Opportunity
Another important element of Meren Energy’s investment outlook is the Venus development offshore Namibia.
According to Arctic Securities, Venus Phase 1 is technically ready for a final investment decision (FID). However, discussions between the project’s operator and Namibian authorities concerning fiscal terms remain unresolved.
Consequently, the anticipated investment decision has shifted from mid-2026 towards the end of the year.While this introduces uncertainty around the project’s schedule, Venus remains a significant component of the broker’s valuation.
Arctic Securities assigns a risked value of approximately SEK 2.30 per Meren Energy share to Venus Phase 1, including the benefit of the company’s carried interest.
Further development phases could provide additional value, although their timing and eventual financial contribution remain uncertain.
Arctic Securities Sees Potential for Strong Free Cash Flow
Meren Energy’s expected cash generation is another important feature of the research.
Arctic Securities estimates that the company could deliver an average free cash flow yield of approximately 17% between 2026 and 2032.
Importantly, that calculation excludes contributions from Namibia before a formal investment decision has been taken on Venus Phase 1.
The broker’s forecasts also indicate:
- 2026 estimated revenue: USD 633.7 million.
- 2026 estimated EBITDA: USD 404.4 million.
- 2026 estimated EBIT: USD 187.8 million.
- 2027 estimated revenue: USD 603.0 million.
- 2027 estimated EBITDA: USD 391.0 million.
- 2027 estimated net profit: USD 75.4 million.
- 2026 estimated dividend yield: 11.7%, based on the research note’s valuation assumptions.
These figures are forecasts rather than guaranteed outcomes and remain sensitive to oil prices, production performance and capital expenditure requirements.
Arctic Securities has also adopted a more conservative oil price assumption, using Brent crude at USD 90 per barrel for the second half of 2026 and USD 80 per barrel from 2027 onwards in its valuation.
Arctic Securities Maintains Buy Recommendation and Raises Price Target
Despite the rescheduling of some development activities, Arctic Securities continues to identify value in Meren Energy’s existing production assets and longer-term project portfolio.
Research analyst Daniel Stenslet writes:
“Meren’s Q2 update served as a reminder of the company’s large organic opportunity set.”
The broker calculates a full net asset value of approximately SEK 25 per share, compared with its revised price target of SEK 21.This discount reflects uncertainty surrounding the timing and potential financial impact of the company’s development projects.
The revised target nevertheless represents an increase of 5% from the previous SEK 20 valuation.
Key potential developments towards the end of 2026 include the restart of Nigerian drilling activity, appraisal of Ikija, exploration of Akpo Far East and a possible investment decision on Venus Phase 1.
Each could help investors assess the scale and timing of Meren Energy’s future production and cash flow opportunities.
Final Thoughts
Meren Energy enters the latter part of 2026 with a substantial portfolio of opportunities, supported by established oil production in Nigeria and potential longer-term developments in Namibia.
The latest research note from Arctic Securities suggests that the company’s existing assets, prospective drilling programme and cash flow outlook provide grounds for maintaining a positive investment view.
Although development delays and outstanding fiscal negotiations remain important considerations, the broker’s increased SEK 21 price target and continued Buy recommendation indicate confidence in the value of Meren Energy’s asset portfolio.
For investors following the company, progress in Nigeria and the anticipated Venus investment decision will be particularly important developments to monitor.
