Cormart Report Here are some excerpts from Cormart's latest notes at the end of October. I can usually get my hands on any report through work though it appears that Cormart's "Initating Coverage" report would of been too long ago - and dated nonetheless.
Their 2700 bopd for 2013 estimate is likely too aggressive considering we haven't heard anything about the jet pump installations yet.
Was getting a little quiet here so I hope you enjoy :)
Details:
Q3/F12 Summary:
• Q3/F12 production averaged 1,373 B/d, compared to our 1,500 B/d estimate while cash flow came in
at $4.6 MM ($0.07 per share), versus our $6.5 MM ($0.10 per share) estimate. The negative variance
in cash flow was largely the result of lower than expected oil price realizations.
• At the end of quarter, Stream had net debt of $21.1 MM, with $18.8 MM drawn on a bank line of
$20.0 MM.
Operational Update and Outlook:
• On the Cakran-Mollaj oilfield, the Company continues to prepare for the integration of six additional
jet pump wells in Q4/C12.
• Stream is also preparing for the takeover of the remaining Ballsh-Hekal oilfield wells and facilities,
which is expected at the end of 2012 or early 2013.
• The first phase of the Gorisht-Kocul waterflood is underway with data from this initial phase to be
used in support of an expanded waterflood design.
• On the Delvina field, Stream continues to advance activities to support the drilling of its first horizontal
gas well, now expected in H1/13. Facilities work continues in preparation for increased liquids
recovery following the drilling of the first horizontal well.
Guidance/Estimates:
• Our estimates are changed as follows:
o F2012: Production of 1,220 BOE/d (previously 1,400 BOE/d) with cash flow of $19.1 MM, or
$0.28 per share (diluted), versus $25.2 MM, or $0.38 per share (diluted) previously.
o F2013: Production of 2,700 BOE/d (previously 3,000 BOE/d) with cash flow of $45.5 MM, or
$0.68 per share (diluted), versus $51.0 MM, or $0.76 per share (diluted) previously.
Financial Flexibility: Based on our forecast, we expect the Company to have net debt of $23.0 MM at the
end of F2012 (1.2x trailing cash flow) and $38.0 MM at the end of F2013 (0.8x trailing cash flow).
Valuation:
• At yesterday’s closing price of C$1.04, Stream is valued at an EV/DACF multiple of 2.3x our F2013
estimates and 0.3x its NAV.
• Our target is based on a risked assessment of the Company’s asset base and potential development
and exploration upside. Our risked NPV is unchanged at C$3.76, and is the basis for our C$3.50
target price (unchanged).
Conclusion: Stream continues to execute on a program which will result in growing oil production and a
relatively near-term derisking of its gas/condensate field. With its large captured resource and extremely
attractive valuation, we are maintaining our Buy rating and C$3.50 target on the stock.