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Equal Energy Ltd. Message Board

  • greatemailslob greatemailslob May 12, 2012 1:23 PM Flag

    desjardins comment

    Equal announces 1Q12 results; reiterating production guidance but reducing 2012 cash flow --
    Impact: Neutral
    Equal reported 1Q12 production of 10,383boe/d (51% oil and liquids), which beat our estimate of 9,920boe/d (52% oil
    and liquids). However, the company missed on cash flow as it posted C$13m, or C$0.36/share, compared with our
    estimate and the Street’s expectations of C$0.43/share and C$0.45/share, respectively. The miss can be primarily
    attributed to lower-than-expected realized NGL prices (C$39.03/bbl vs our C$46.63/bbl estimate). NGL differentials are at
    historically low levels in Oklahoma although we expect them to trend higher in the back half of 2012.
    The company also announced the continuation of its credit facility of C$200m following the end of 1Q12. We view this
    positively given that we had initially thought it would have been decreased by ~C$25m following a couple of divestitures
    in late 2011/early 2012 of ~2,100boe/d. Management also reiterated its 2012 production guidance of 9,500–9,800boe/d
    (vs our 9,520boe/d estimate), but given prevailing weak natural gas and NGL pricing, cash flow expectations have been
    reduced to C$50–55m; this is as expected and compares with our current estimate of C$52m.
    Overall, we are pleased with the results as operations are on track and the miss on cash flow was due to weak NGL
    differentials, which we expect to revert to more normalized levels in the back half of 2012. We will fine-tune our model
    but do not expect any material changes. Given the company has just announced a strategic review process, the next
    catalysts for Equal include further asset rationalization (we are of the view that the Viking and Cardium assets in Canada
    are the most attractive) as well as results from its Mississippian JV in Oklahoma, which is set to commence in late
    2Q12/early 3Q12. We maintain our Buy–Above-average Risk rating and 12-month target price of C$5.

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    • APRIL 27, 2012
      Research
      Oil & Gas
      Only Mother Nature can turn around natural gas prices this summer,
      ‘bullish’ outlook for oil-weighted equities maintained;
      revising our rating on Argosy to Buy–Speculative from Buy–Above-average Risk,
      and decreasing our targets on Argosy, Equal, NuVista and Waldron
      Desjardins
      Capital Markets
       We are updating our crude oil and natural gas commodity outlook
       We are increasing our 2012 WTI crude oil forecast to US$95.00/bbl (from US$92.50/bbl) while maintaining
      our 2013 forecast of US$100.00/bbl. We are also reducing our 2012 Henry Hub natural gas forecast to
      US$2.60/mmbtu (from US$4.00/mmbtu) and our 2013 forecast to US$3.75/mmbtu (from US$4.75/mmbtu),
      and presenting our 2014 forecast of US$4.50/mmbtu
       We are reducing our price targets for natural gas–weighted companies in our coverage universe, namely
      NuVista Energy (to C$5.00 from C$8.00) in the intermediate/large-cap category, and Argosy Energy (to C$1.40
      from C$2.00), Equal Energy (to C$5.00 from C$5.25) and Waldron Energy (to C$1.25 from C$2.00) in the junior
      category. We are also revising our rating on Argosy to Buy–Speculative (from Buy–Above-average Risk)
      Highlights. We are updating our commodity price forecast to reflect our 2012 and 2013 crude oil and natural gas

    • Thanks for sharing this note, greatemails. Desjardins initiated their coverage with a buy and a C$5.25 target. Did I miss that they cut it 0.25 or did you cut it off?

 

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