WITH IRISH NATURAL resources companies in the headlines of late, yesterday’s publication by Merrion Stockbrokers of a 73-page report on the sector is certainly timely.

Not surprisingly, analyst Munya Muleya has put a buy sticker on Tullow, Petroceltic, Kenmare Resources and Dragon Oil.

Ormonde Mining got a speculative buy recommendation on the basis that its tungsten project is somewhat risky.

Petroneft is considered a hold until issues around its exploration portfolio in Russia are resolved.

However, clients are advised to sell Cove Energy, the subject of a takeover tussle at present.

Merrion initiated coverage on Cove almost a year ago with a price target of £1.28, which was raised to £1.70 when its natural gas estimates for Mozambique were upgraded.

It now trades above £2 though shares have softened following noises from the government in Mozambique that it might levy a hefty capital gains tax on the company if it’s sold.

“Although we believe the company’s assets offer potential through an improved takeover price or reserve upgrades, the timing and amount of such value is uncertain,” Muleya said.

“As such, we believe investors should reduce their holdings at the current elevated price.”