summary of Canaccord upgrade RMP Energy Inc. (RMP.T) - ↑Buy - Mkt Cap $141M -
RMP Energy reported Q1/16 results this morning before market. Production, cashflow and capex were largely in line with our forecasts and consensus estimates. With the release RMP announced full year guidance, which shows the company limiting spending, giving way to production declines through the year. As a result we have lowered our production and cashflow expectations for 2016 and 2017. At the same time we are raising our rating to BUY (from Hold). While we recognize the declining production in 2016, we believe the sell off of the stock has been overdone, and the market is ignoring the potential at Gold Creek, and the improving well results at Waskahigan. Our target remains at $2.00/share, which is NAV-based and maps to a 2017E EV/DACF of 6.1x. On the current share price our target implies a return of 67%.