GREY:BXEFF - Post by User
Post by
valjan1on Aug 10, 2016 6:22pm
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Post# 25128466
National Bank research
National Bank researchQ2 2016 Results Below Expectations The company reported Q2 results below expectations, with average production of 38,000 boe/d (72% gas) and associated CFPS of $0.05 (vs. consensus $0.06). During the quarter, the company realized a cash netback of $2.62/boe (down 29% Q/Q, correlated to AECO), while cash costs rose 9% Q/Q ($15/boe) and are expected to persist higher. Operational Highlights During the quarter, capital activities were limited (<$8 mln), with volumes optimistically remaining flat Q/Q with no new wells drilled, and reflecting the resiliency of the company’s asset base. H2 guidance remains unchanged (34,500 boe/d avg., -10% H/H) under a largely cash flow-oriented budget of $40 mln. Capitalization and Hedging Overview Inclusive of disposition and financing activity subsequent to quarter end, we see pro-forma net debt of $497 mln (10.6x D/CF), while it is drawn 75% on a revised $160 mln revolving bank line (from $210 mln). Recall, the company is well hedged with 60% of H2 gas sold at $2.96/mcf and 35% of 2017 gas sold at $3.37/mcf. Maintain Outperform Rating; Reducing Target Price to $1.50/share (Was $2.00) A muted quarter for the company, with drag noted from cash costs, while indicative of the improving sustainability of its assets its volumes remained intact on limited spending. Liquidity has improved, and while capitalization challenges remain, value maintenance will rely on its solid sustainability profile and a commodity rally, with the stock currently trading at 6.0x 2017e EV/DACF (vs. peers 8.7x) on leverage of 5.5x (vs. peers 2.4x).