Friday, December 16, 2011

CIBC and Credit Suisse on Petrobakken

PetroBakken Estimates Revised at Credit Suisse - $17 target

Analyst Actions: PetroBakken Estimates Revised at Credit Suisse After Changes in Oil Price Forecasts
Brent price forecast unchanged but NYMEX weakness could persist near-term. "Credit Suisse has updated its commodity price view to reflect downward adjustment to NYMEX natural gas prices and a narrower differential between WTI and Brent. The Brentoil price forecast itself is unchanged. For NYMEX gas, Credit Suisse expects weakness to persist near-term as production takes time to fall in response to falling rig counts (mitigating factors include wells behind pipe, liquids drilling and efficiency gains). The long term view of the NYMEX gas price is unchanged at $5.50. The Brent forecast continues to reflect a 3.4% global GDP growthrate for 2012 with downside demand risk balanced by real supply risk across MENA and other significant producers (e.g., Venezuela, Russia, Nigeria). Please see our full report for complete details of changes, including for Edmonton Par, AECO and the WCS differential."
Revising PetroBakken Estimates After New Oil Price Forecasts. "Incorporating our new oil and gas price forecasts and recent guidance for production, capital expenditures and a new DRIP program for 2012, we have made the following changes to full year estimates for PetroBakken. Our 2011 EPS/CFPS go from C$1.36/3.51 to C$1.50/3.71 while 2012 go from C$1.36/4.55 to C$1.45/4.50. Our 2013 EPS estimate is also lowered to C$2.32 from C$2.36."
Maintains C$17 Price Target. "With only modest changes to our 2012 and 2013 estimates, we are maintaining our target of C$17 at this time. Our target is based on 4.00x 2013E EBIDAX of C$1,227 million, a ~35% discount to mid-cap peers given lower liquidity and capital structure uncertainties, including refinance of convertible debt."

PetroBakken Energy Ltd.
2012 Guidance & Current Production Point To Sustained Growth
 PetroBakken (PBN-SO) announced its 2012 capital budget yesterday,
guiding to spending of $700MM - essentially in line with our forecast and
down from 2011 spending of ~$900MM. Spending is expected to result in a
2012 exit rate of 50,000 – 54,000 Boe/d.
 PetroBakken also noted that in early December current production was over
48,000 Boe/d, with over 1,450 Boe/d of shut-in production awaiting tie-in.
The company continues to forecast 2011 exit production of over 49,000
 PBN announced that it is implementing a DRIP program to support inflows in
2012. Of note, PBN has guided to a base decline rate of 30-35% in 2012
(vs. 40% in 2010). In addition, the company announced the appointment of
Brett Wilson (co-founder of First Energy) as a Director.
 We are maintaining our Sector Outperformer rating on PetroBakken, with an
unchanged price target at $21.00. PBN currently trades at a 2012E
EV/DACF multiple of 4.4x and a P/Risked NAV of 41% (vs. group averages
of 8.0x and 74%, respectively).

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