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iShares Mortgage Real Estate Capped Message Board

  • mknightsilcomcom mknightsilcomcom Jan 15, 2004 2:52 PM Flag

    FBR reiterates near term $23.50 target

    Comment on news from REM by FBR
    <<Significant Near-Term Reserve Exposure�Adjusting Estimates, Reiterating Outperform Rating
    Summary and Recommendation: Remington announced two offshore Gulf of Mexico exploratory discoveries, which gives us increased comfort with our 2004 production growth estimate of 8%. In addition, the company is currently drilling several high-impact wells that are expected to reach targeted depth within the next month and expose the company to nearly 82 Bcfe of net reserve potential, or 40% of its proved year-end reserve base. Based on a large balanced prospect inventory, low debt levels, and a management team with an impressive track record, we are reiterating our Outperform rating and our 12-month price target of $23.50 per share.
    Key Points:
    Exploratory success encountered; high-impact exploratory wells in
    progress. REM announced two offshore GOM discoveries at West Cameron 458#1 and East Cameron 73#1. Collectively, the discoveries provide net reserve exposure of approximately 23 Bcfe. The company is currently drilling three additional exploratory wells, which we believe should reach total depth within the next month. Adjusting 4Q03 and 2004 estimates. We are adjusting our 4Q03 and 2004 EPS/CFPS estimates to $0.36/$1.39 and $1.57/$5.51 from $0.38/$1.45 and $1.64/$5.67, respectively, to reflect minor timing delays in initial production from discovered projects. Our 2004 estimates are based on benchmark WTI oil and composite spot natural gas prices of $27.00/Bbl and $5.25/Mcf, respectively. Valuation. Our target price is based on REM shares trading at 3.5x our 2004 TEV to debt-adjusted cash flow estimate and at a 2% premium to our 2002 NAV estimate. The comparable peer group trades at 4.7x 2004 TEV/DACF and at 109% of NAV

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