Stonecap Securities initiated coverage of () Friday, starting the company with an "outperform rating" and calling it one of the highest dividend paying stocks among the junior oil and gas companies.
Stonecap analyst Aminul Haque notes Mart's low-exploration risk, as the company operates a marginal field in Nigeria, with a "long-established discovery and proven reserves," he says.
The report also takes note of the company's local knowledge, as the CEO of Mart has long involvement of more than two decades in the west African oil and gas industry, and "strong local partnerships" as well as an on-the-ground team that provide both an "operational and regulatory advantage".
Haque says: "Mart has developed an effective strategy to manage Nigeria specific risks. The company has taken full advantage of the favorable conditions by growing production, cashflow and reserves in the past two years.
"Mart is one of the highest dividend paying stocks among the junior oil and gas companies."
The analyst also says Mart is "adequately financed", with around $50 million in cash, and a large operating cashflow, making it well positioned to continue its dividend payment and current capital program.
"If the Nigerian government allocates/reallocates marginal fields during 2012-13 as expected, Mart is prepared to take advantage of such opportunities."
Mart is also armed with significant growth opportunity, Stonecap's analyst notes, resulting from completed and upcoming development drilling, as well as facilities and pipeline upgrades.
Further growth is expected from stepped-out exploration drilling in the eastern and western extensions of the Umusadege field and the acquisition of new marginal fields.
"Mart has the financial and technical expertise to take advantage of marginal fields offered by the Nigerian government, and fields available through future IOC divestments. In a recent example of such transaction, acquired a 45% stake in OML 30 from Shell, Total and ENI," Haque concludes.
Stonecap Securities issued a one year price target of $2.50 on , which if achieved, would provide an "attractive 47.5% total return, including an 11% dividend yield."
Mart is currently changing hands at $1.84, up 0.55% for the day.
https://www.proactiveinvestors.com/companies/news/36866/stonecap-securities-calls-mart-resources-one-of-the-highest-dividend-paying-stocks-in-junior-oil-and-gas-industry-36866.html