OPCO upgrade: EVEP - OUTPERFORM (PT $85) "CHK reported that the Utica is a "major new liquids-rich discovery", and estimated that its acreage is worth $12,000 to $16,000/acre. EVEP owns 150,000 net acres in the Utica plus an overriding royalty interest (ORRI) on another 80,000 acres. Our $85 price target assumes EVEP's net acreage is worth $10,000/acre and we do not place any incremental value on the ORRI interest. Our price target may be conservative should EVEP monetize its acreage in line with CHK's range. However, we must also consider the source. CHK talked about monetizing its Utica position in the near future, which provides it an incentive to exaggerate estimated value."
Wait for Richard Roy of Citigroup Research to revise their estimates and valuations. Go back and look at their last set of assumptions and where things may be headed, they have been pretty consistent thus far.