May 9, 2012 / 11:18 AM / in 5 years

UPDATE 1-M&A opportunities remain in Europe E&P industry - Goldman

* Goldman raises Soco, Genel, Serica, Falkland, Global Energy to "buy"

* Goldman cuts Afren, Chariot Oil, Valiant Petroleum, Nautical Petroleum to "neutral"

* Goldman lifts price target on Cove Energy, Bowleven, Desire Petroleum, Dragon Oil, Enquest

May 9 (Reuters) - Goldman Sachs raised its price target on several European exploration and production companies and said there were opportunities for deals in some assets in the sector.

"Although we do not believe share prices are at levels to incentivize widespread M&A, attractive targets remain," the brokerage said in a note dated May 8.

Goldman analysts increased their price targets on the stocks of Ophir Energy Plc, Rockhopper Exploration Plc and Tullow Oil Plc, among others.

Oil companies that trade at a significant discount to the value of their core discoveries are the most attractive take-out candidates, especially if that value is concentrated in a single country, Goldman said.

It said West Africa-focused Bowleven Plc, Rockhopper - with assets in the North Falkland Basin - and Panoro Energy ASA that operates in the South Atlantic region, looked particularly attractive on this basis.

However, exploration and production companies that are not organically funded to develop an asset in emerging markets have the potential to lose value through additional transaction taxes.

Royal Dutch Shell Plc's planned $1.8 billion takeover of Cove Energy Plc would be subject to a new capital gains tax being introduced by the Mozambique government.

Last year, London-listed Tullow paid $313 million in capital gains tax to the government of Uganda for assets it bought from Heritage Oil Plc.

"We note that in emerging market economies, capital gains tax is increasingly being levied on such transactions, adding additional costs to this strategy," Goldman said.

The brokerage listed Gulf Keystone and Afren , among others, as companies with large discoveries in emerging market economies that could be at risk of tax when monetizing value.

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