OTCPK:PDPYF - Post by User
Post by
CanadianBuckon Aug 13, 2015 9:41am
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Post# 24014260
CIBC Report today - BUY with $9.50 target
CIBC Report today - BUY with $9.50 target
What's The Event Painted Pony (PPY-SO) reported a solid quarter, with production in line and better-than-expected cash flow. Volumes averaged 15,622 Boe/d (94% gas), in line with our 15,500 Boe/d (92% gas estimate). Cash flow of $10.2 MM (incl. DSU charges) or $0.10/share was 4% better than our $9.7 MM ($0.10/share) estimate, with consensus at $0.10/share. The beat was driven by better operating, royalty and interest costs. Outside of the solid quarter, we are encouraged by the update on the "Parallel-Pair" wells, which are two side-by-side wells fraced in sequence prior to flow-back. The company has had success with this technique in the Blair-Daiber and has now tested its first pair in Townsend. Initial flow rates were strong, with the wells producing at an average of 21.1 MMcf/d of gas and 1,100 Bbl/d of NGLs over the last 72 hours of testing. While we don't put significant focus on short-term test rates, we do believe these results have the potential to drive up reserves and lower capital efficiency as we get longerterm production data. Implications With the update, we have made an improvement to our 2016 outlook through a reduction in our operating cost assumption (see Exhibit 2). Overall, we believe the company is well situated in the Montney given the high pressures seen in the area and the company's infrastructure solutions, which reduce the call on the Painted Pony's cash flow and balance sheet.