Post by
Al42 on Nov 09, 2012 5:37am
From RBC D.I.
Longview Oil Corp. (TSX: LNV)
Q3 Results In-Line; Dividend Stable
Sector Perform
Above Average Risk
Price: 6.51
Shares O/S (MM): 46.8
Dividend: 0.60
Price Target: 8.50
Implied All-In Return: 40%
Market Cap (MM): 305
Yield: 9.2%
Priced at market close November 8, 2012 ET.
Event
Longview reported Q3 results that were in-line with expectations and
management re-iterated the company's commitment to the dividend.
Results In-Line; Production Gassier than Expected
Production In-Line. Production of 6,013 boe/d was in-line with our estimate of
6,083 boe/d, although the mix was more weighted to natural gas than we had
expected. Third quarter production was 75% oil weighted versus our estimate of
78%. Production was up 2% from Q2/12 and flat year-over-year.
FFO In-Line. FFO per share of $0.31 was in-line with our estimate of $0.29 and
consensus of $0.30.
Corporate Update - Dividend Appears Stable
Set Up for Stronger Q4/12. Current production is ~6,300 boe/d with more wells
awaiting completion and tie-in before year-end. The company should comfortably
be able to meet our Q4/12 production estimate.
Lower Op.Costs Expected. Higher production rates in Q4/12 should held reduce
per unit operating costs next quarter from the $20.44/boe reported in Q3/12.
Drilling Update. Year-to-date, the company has drilled 16.6 net oil wells (24
gross) with an 88% success rate.
Comfortable Debt Balance Assures Dividend Stability. At quarter end, the
company was 58% drawn at $115.3 mm against its $200 mm credit facility.
Based on expected spending plans and dividend payments, the company has
sufficient financial liquidity to execute a reasonable 2013 program and sustain
current dividend payments.
Hedging Update. The company does not currently have any production hedged
beyond year-end 2012, but management continues to evaluate hedging
opportunities.
Recommendation and Valuation
Maintaining Sector Perform. We maintain our Sector Perform, Above Average
Risk recommendation and our $8.50 price target, which maps to a 0.8x multiple
of Base NAV, below the oil weighted peer group average of 1.2x.
Comment by
Al42 on Nov 09, 2012 9:55am
Doesn't look like market likes the numbers?