from TD research Spartan Energy Corp.
(SPE-T) C$2.61
2015 Budget Highlights a Steady Ship in Stormy Seas
Event
Tuesday before market, Spartan announced its budget for 2015. Our BUY
recommendation and $4.00 target price remain unchanged.
Impact: POSITIVE
The capital budget implies better capital efficiencies than we had been
assuming. Drilling opportunities are focused on SE Saskatchewan, including
an additional 4.9 fracced Midale wells at Pinto, currently testing ahead of
type. Q4 average and exit rates are ahead of both guidance and TD.
TD Investment Conclusion
Spartan’s budget highlights a management team delivering excellent results
in managing market expectations, a track record that holds steady despite the
current market volatility. Our current estimates show a company able to grow
production 9% Q4/14 to Q4/15, while remaining close to free cash flow
neutral in 2015. When combined with the low decline rate and attractive
capital efficiencies afforded from the low-risk development prospects in
Southeast Saskatchewan, and a top-tier balance sheet, we believe that Spartan
offers a relatively safe E&P investment in which to withstand the currently
volatile commodity environment and avail of tactical acquisition
opportunities.