RBC Reports April 17th and 21st RBC on April 21st released a report stating projections for next week's results
That report shows that RBC is expecting a Q1 2017 production average of 15,100 boe/d, and a CFPS of 0.24, which is 100% higher than Q12016 CFPS of 0.12.
Hopefully these are conservative numbers, and CJ should meet or exceed them. It sounds like CJ also will get their operating expenses down compared to last quarter, so that should be good too.
Here is the report from RBC on April 17th. It has some good info for perspective.
"April 17, 2017
Cardinal Energy Ltd.
Management meeting highlights
Our view: We hosted institutional investor meetings for Scott Ratushny
(President & CEO). In our minds, Cardinal’s operations and financial
position remain quite sound with upcoming Mitsue well results a visible
catalyst for the stock.
Key points:
• Higher volumes to drive down unit opex. Cardinal’s 2017 plan targets
operating costs below $20/boe in the second half of the year mainly
from higher volumes via an expanded drilling program outside its Bantry
core area. In addition to the initial Mitsue drilling program, Cardinal
also plans a pair of multi-lateral hz’s in the Waseca sands at Wainwright
while also testing Dunvegan oil potential on recently acquired acreage.
In terms of key optimization projects, start-up of a small co-generation
facility at Mitsue should counter higher power costs resulting from
carbon taxes.
• Getting ahead of tight frac market. Management’s strategy is to
complete the majority of its 2017 program in Q2 and Q3 when pressure
pumping demand from completion intensive plays is relatively low.
This accelerated timeline should allow Cardinal to rebuild a healthy
“cushion” vs its full year guidance targets, in our view.
• Mitsue well results provide visible catalyst. Management sounded
most optimistic about the tight sand play on the Southern portion of
the field, shown in exhibit 2, while also describing the western flank
as more of a “bread and butter” type area with potential for shallower
declines from existing waterflood support. With expected well costs
of approximately $2.8 million at Mitsue vs $1.8 million at Bantry, we
think initial oil rates between 350 to 400 bbl/d would likely drive higher
economic returns at Mitsue given its 41° API gravity. We currently see
Mitsue’s $0.91/share unrisked blue-sky upside as a free option with
Cardinal shares trading below our 2P NAV.
• Discounted valuation: get paid to wait. At our price deck, Cardinal
trades at a 5.1x 2017E EV/DACF (excluding realized hedging gains)
multiple vs oil-weighted peers at 6.2x. Cardinal’s $0.42/share annual
dividend maps to a 6.1% cash yield and 34% basic payout ratio with
downside protection from 6,200 bbl/d of oil hedges at an average WTI
floor price of C$63/bbl. We think Cardinal remains well positioned to
utilize its balance sheet for accretive opportunities with approximately
$80 million in remaining capacity on a $150 million bank line, set below
the $250 million borrowing base.
• We reiterate our Outperform rating and 12-month price target of
$11.00 per share. Our $11.00 one-year price target and Outperform
rating are based on a rounded 1.0x multiple of the $11.47/share sum of
our adjusted base NAV of $9.37 plus $2.10 of risked upside. Our rating
and 12-month price target reflects our expectations of solid execution,
Cardinal's best-in-class sub 15% decline rate, low capital efficiency and
solid financial outlook.
Target price/base case
Our base case and $11.00 price target reflects Cardinal's topquartile
sub-15% decline rate and resulting sub-100% payout
ratio, and a strong financial outlook that allows Cardinal to
maintain its $0.42/share dividend for a 3.8% cash yield. Our
base case maps to 1.0x P/NAV (fully-risked NAV) and 7.7x
2017E EV/DACF (excluding realized hedging) multiples.
Upside scenario
Our upside valuation of $13.00 is based on successful
derisking of Cardinal's 200+ well unbooked drilling
inventory, sustainable 5–10% dividend growth from accretive
acquisitions, and no change to the company's financial
outlook. Our upside case maps to 1.1x P/NAV (fully-risked
NAV) and 8.9x 2017E EV/DACF (excluding realized hedging)
multiples, with no change to our commodity outlook.
Downside scenario
Our downside valuation of $6.00 reflects inconsistent
Glauconitic drilling results and a soft acquisition market
for oil-weighted properties, leading to increased financial
leverage, which could pressure Cardinal's current dividend.
Our downside case maps to 0.5x P/NAV (fully-risked NAV) and
4.6x 2017E EV/DACF (excluding realized hedging) multiples,
with no change to our commodity outlook.
Investment summary
We rate Cardinal Energy shares Outperform with an $11.00
price target.
• Staying power: Cardinal's staying power comes from its
best-in-class sub-15% decline rate. The low decline rate
allows for a sub-100% all-in payout ratio in 2017E and FCF
optionality to drill, acquire, or increase its dividend in a
normalized commodity environment.
• Experienced leadership team: Management's extensive
track record includes the sale of five growth-oriented
E&Ps, all delivering positive returns. This time, Cardinal's
game plan revolves around decline-rate management and
accretive acquisitions to grow production and dividends.
• Attractive upside: A profitable 130-well development
inventory in a Glauconitic tight oil play offers additional
upside, valued at $2.49/share on an unrisked basis plus 70
unbooked Mitsue locations for $0.91/share unrisked.
• Strong financial outlook: We project Cardinal to be $61
million drawn on its $150 million bank line at YE17, plus $50
million convertible debentures (5.5% coupon, maturing Dec
2020 with a $10.50 conversion price), which maps to netdebt-
to-trailing-cash-flow ratio of 1.2x.
• Risks: Include variable drilling results, a prolonged decline in
oil prices, fiscal changes, and access to capital and producing
oil-weighted properties at a reasonable cost.
Management meeting highlights
We hosted institutional investor meetings for Scott Ratushny (President & CEO). In our
minds, Cardinal’s operations and financial position remain quite sound with upcoming
Mitsue well results a visible catalyst for the stock.
Cardinal’s 2017 plan targets operating costs below $20/boe in the second half of the year
mainly from higher volumes via an expanded drilling program outside its Bantry core area. In
addition to the initial Mitsue drilling program, Cardinal also plans a pair of multi-lateral hz’s
in the Waseca sands at Wainwright while also testing Dunvegan oil potential on recently
acquired acreage. In terms of key optimization projects, management pointed to the start-up
of a small co-generation facility at Mitsue should counter higher power costs resulting from
carbon taxes. Management’s strategy with respect to service sector tightness is to complete
the majority of its 2017 program in Q2 and Q3 when pressure pumping demand from
completion intensive plays is relatively low. This accelerated timeline should allow Cardinal
to rebuild a healthy “cushion” vs its full year guidance targets, in our view.
At Mitsue, Cardinal expects to report initial production rates from its three wells in
conjunction with Q1 results in early May. Management sounded most optimistic about the
tight sand play on the Southern portion of the field, shown in exhibit 2, while also describing
the western flank as more of a “bread and butter” type area with potential for shallower
declines from existing waterflood support. Cardinal expects lower water cuts in the south
and has ample fluid handling capacity, which should allow it to increase field volumes on a
half-cycle basis. With expected well costs of approximately $2.8 million at Mitsue vs $1.8
million at Bantry, we think initial oil rates between 350 to 400 bbl/d would likely drive higher
economic returns at Mitsue given its 41° API gravity. We currently see Mitsue’s $0.91/share
unrisked blue-sky upside as a free option with Cardinal shares trading below our 2P NAV.
At our price deck, Cardinal trades at a 5.1x 2017E EV/DACF (excluding realized hedging gains)
multiple vs oil-weighted peers at 6.2x. Cardinal’s $0.42/share annual dividend maps to a 34 %
basic payout ratio with downside protection from 6,200 bbl/d of oil hedges at an average
WTI floor price of C$63/bbl. We think Cardinal remains well positioned to utilize its balance
sheet for accretive opportunities with approximately $80 million in remaining capacity on a
$150 million bank line, set below the $250 million borrowing base.
We reiterate our Outperform rating and 12-month price target of $11.00 per share. Our
$11.00 one-year price target and Outperform rating are based on a rounded 1.0x multiple of
the $11.47/share sum of our adjusted base NAV of $9.37 plus $2.10 from risked
development. Our rating and 12-month price target reflects our expectations of solid
execution, Cardinal's best-in-class sub 15% decline rate and payout ratios, with a solid
financial outlook."