Lone Pine Resources, Inc.
LPR: Board Replaces CEO And CFO--Raising 2013 On Asset Sale
• Summary: Last night (2/27), Lone Pine announced that it has terminated CEO
David Anderson and CFO Edward Bereznicki and appointed David Fitzpatrick, a
member of the LPR board of directors, as interim CEO, effectively immediately.
Mr. Fitzpatrick has served on the board of LPR since its IPO in 2011 and has more
than ten years of experience as a CEO in the industry. The company has initiated
a search process for a permanent CEO and has retained an executive search firm
to assist in the process. We are updating our 2013 EPS estimate to a loss of $0.08
from a $0.09 loss to reflect the proceeds from the recently announced Herronton
• What's Next. With shares under pressure over the past year given a tight
liquidity situation in the face of declining gas prices, we think it makes sense for
the board to seek a new strategic direction. As things currently stand, the current
path is for the board to appoint a new management team and continue with the
ongoing asset base review process. Regarding the asset base review, the company
has made significant progress over last few months delivering in excess of
$110MM in proceeds that should alleviate near-term liquidity concerns. We still
think more is to come on the asset monetization front with an Evi joint venture
the most-preferred option as the company looks to delever and solidify its
liquidity position. We would not be surprised to see other strategic options
considered as the company undergoes this transition. Bottom line, we believe
shares should react well to news as all options are likely to remain on the table.
Valuation Range: $6.00 to $8.00
Our valuation range is based on our NAV estimate, which includes value for both
proven and unproven reserves, as well as other net assets and liabilities. Our NAV
estimate for LPR is $6.91 per share. Risks to our NAV include material sustained oil
and gas price weakness and failure of new assets to live up to expectations.