Painted Pony Pete Ltd PDPYF

Canaccord - Comments on PPY Jan 27th

[CanadianBuck]

Painted Pony Petroleum* (PPY : TSX : $3.98), Net Change: 0.40, % Change: 11.17%, Volume: 1,275,267

THIS YEAR FOR VALENTINES, GET YOUR SIGNIFICANT OTHER A PONY. Painted Pony released a brief operational update, which highlighted further cost savings in its Montney Drilling program. Having already lowered capital spend expectations for 2016 from $287 million to $215 million, PPY now plans to spend just $198 million and still achieve its lofty production targets, including reaching +40,000 boe/d by yearend. Canaccord Genuity Energy Analyst Anthony Petrucci believes this highlights precisely why now is an excellent time to be building out production, production processing and pipelines for PPY. While some question PPYs aggressive growth plans given current commodity prices, having the ability to grow in this environment is saving the company ~$100 million in capex, with the increased cash flow to benefit PPY in 2017 and beyond. Also highlighted in the release is the further and continued benefit PPY is experiencing through its strategic partnership with AltaGas (ALA), which announced last week that it plans to build a propane export facility on the coast of B.C. Through ALA and the facility, PPY will have gain access to world propane prices, which often trade at a significant premium to domestic prices. In Petruccis view PPY offers the best combination of growth and balance sheet strength across the junior and E&P universe, while trading at one of the most attractive valuations (3.0x 2017E EV/DACF vs peers at 6.0x).