From CIBC Twin Butte Energy Ltd.
Q2 In Line; Commitment To Dividend Reinforced
Twin Butte reported Q2/14 results yesterday that were essentially in line
with expectations. Q2 production of 21,109 Boe/d was within 1% of our
forecast and consensus, while funds flow of $0.14/share (basic) was within
a penny of both our estimate and consensus of $0.13/share.
In tandem with Q2 results, Twin Butte reinforced its commitment to its
current dividend level, which has been approved through to the end of the
year by its board of directors. We calculate a 2014 total payout ratio for TBE
of 98% in 2014 and believe its dividend to be secure at current levels.
Owing to an active Q3 capital plan of ~$50MM (40 wells planned), the
company anticipates production growth into Q4, which will place Twin Butte
on track to meet its new 2014 exit production guidance of 22,500 Boe/d
(which was reduced at Q1 results).
We are maintaining our Sector Performer rating with an unchanged price
target of $2.25. TBE trades at a 2015E EV/DACF multiple of 3.3x and a
P/Risked NAV of 55% (vs. the group averages of 6.6x and 76%) with a cash
yield of 11.5% (vs. the group average of 6.1%).