CIBC update on NAENAL Energy Corporation
Q1 Below Consensus; Strong Operational Update
Offsets Lower Guidance
? NAL reported Q1 results yesterday that were in line with our forecasts, but
below consensus. Q1 production of 28,024 Boe/d was 1% above our
forecast, but 4% below consensus of 29,187 Boe/d, while cash flow of
.39/share (including interest) was 9% below consensus.
? Q2 production is expected to be impacted by 2,000 Boe/d-2,500 Boe/d of
shut-ins due to wet weather. NAL has another ~3,500 Boe/d of behind-pipe
production awaiting tie-in in Q3, but has lowered its guidance range to
28,500 Boe/d-29,500 Boe/d, from 29,700 Boe/d-30,700 Boe/d previously.
? NAL provided a promising operational update in tandem with results. In the
Viking in southern AB, NAL's first wells tested at over 1,000 Boe/d. On the
Cardium, NAL highlighted that one of its wells completed in May is currently
producing at more than 500 Boe/d.
? We are maintaining our Sector Outperformer rating on NAL, with an
unchanged price target of $17.50/share. With an above-average 6.8%
yield, attractive Cardium acreage, and a strong balance sheet, NAL remains
our top pick for yield-focused investors.