RE:RE:RE:TD has a target of $1.60 "Spyglass announced Q1/14 results.
. Q1/14 Miss. Volumes of 14,560 boe/d were below Street expectations of 15,634
boe/d, and CFPS of $0.13 was below consensus at $0.16. SGL has 600 boe/d shut-in
after two pipeline leaks at Dixonville which is expected to result in higher 14E
op costs due to clean-up and repairs. YTD SGL has closed $9.9M in dispositions
(200 boe/d & undeveloped land), and continues to look at opportunities.
. Guidance & Facility Down. 2014 is now guided at 14,750 boe/d (prev. 15,000) on
$70M capex ($60M net of disp.), and we are below guidance at 14,425 boe/d.
Subsequent to Q1, SGL's credit facility was renewed at $375M (down from $400M).
As of Q1 end, SGL had 78% of the new facility limit drawn (82% incl. working cap
deficit).
. Sidelined. We are on the sidelines on SGL as we see 2014 as a challenging year.
Valuation is reasonable at 5.7x 2014E EV/DACF, but debt levels remain high at
3.9x, debt-adj prod/sh growth is forecasted at -13%, and targeted capital
efficiencies are of concern to us. In our view, SGL faces necessary deleveraging
which, if achieved through asset sales, could further hinder growth and bring
the sustainability of the dividend into question.
. We are lowering our target to $1.00/sh and maintain our SU rating."