GREY:BXEFF - Post by User
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CanadianBuckon Apr 17, 2015 12:01pm
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Credit Suisse starts with a$4.50 price target
Credit Suisse starts with a$4.50 price target
Catalysts In the near term, one of the more meaningful operational catalysts for the company includes commissioning of its new deep cut gas plant, which is currently anticipated for an in service date of July 1, 2015. Bellatrix currently has approximately 8,000 boe/d of behind-pipe production and should provide a boost to production in H2/15. Aside from operational catalysts, given the company's currently elevated debt levels, we believe monetization of any non-core assets may be viewed positively by the market. Additionally, there are currently activist shareholders involved and a value-oriented investment fund that has taken a significant holding in the company. Potential new developments with these relatively new shareholders may provide support for the stock. Spirit River Economics Robust: Despite the current low commodity price environment, the company's Spirit River liquids-rich natural gas resource play generates robust economics on a half-cycle basis under the current Credit Suisse price deck. Bellatrix is likely to continue focusing on developing this play, which currently has an inventory of 52 booked and 348 unbooked locations. Rating: We initiate coverage of Bellatrix with a Neutral rating and a C$4.50 target price. The robust economics of the Spirit River resource play and debottlenecking of production with the new O'Chiese gas plant, among other positive attributes, are somewhat balanced by relatively higher debt levels that may place constraints on the company if commodity prices remain lower for longer.