Bridge Resources Corp V.BUK

BRIDGE RESOURCES CORP

[Banffstocker]

Fiscal Q3/09 Results Below

Expectations

BUK-TVX C$0.32

Recommendation Speculative BUY

Target Price C$1.30

Projected Return 306.3%
Reason for Comment: Company Update

Event: Bridge released its fiscal Q3/09 (Calendar Q4/08) results on Friday.

Analysis & Forecasts: Bridge was finally able to bring Durango production on-stream in the quarter with the well producing an average 12.7 mmcf/d of gas and 347 bbls/d of condenstate (2.468 BOE/d) over a 35-day period. The realized gas price was US$10.54/mcf. These results were inline with our expectations. The surprise in the quarter was the amount of gas backedout of the LAPS pipeline system as a result of Durango's high pressure. This was equivalent to 7.5 mmcf/d over the 35-day period. As described in our last report, this gas is allocated to the other operators on the pipeline and recovered by Bridge at a later date. We are concerned by the materiality of the amount of backed-out gas. Given that Durango is expected to produce at high rates for the next several years and if the rate of backed-out gas remains consistent, the impact to Bridge could be US$22 million of deferred cash flow ($0.11/share fd) in calendar 2009 using our US$8.06/mmBTU gas price forecast. This would negatively impact our financial outlook for the company.

Valuation & Recommendation: We are leaving our operational and financial forecasts intact until we are able to communicate with management and confirm how much gas back-out is expected over the next year. If our suspicions are correct, we will be reducing our estimates. Our target price is based on an equal weighting of our NAV estimate and our 2009E DACF valuation.


BANFFSTOCKER

[molymoney]

 Fiscal Q3/09 Results BelowExpectationsBUK-TVX C$0.32Recommendation Speculative BUYTarget Price C$1.30Projected Return 306.3%Reason for Comment: Company UpdateEvent: Bridge released its fiscal Q3/09 (Calendar Q4/08) results on Friday.Analysis & Forecasts: Bridge was finally able to bring Durango production on-stream in the quarter with the well producing an average 12.7 mmcf/d of gas and

[mikerosoft666]

But seriously,   even with the backout the price can't really be sub-.30¢ can it ?We have been calculating .85¢ cash flow  ( and note that gas prices are better than the model we have been using ) even if you back out 1/3 of that...  we are still over .50¢ are we not ?Afraid I must be missing something incredibly obvious.  Or is the market just hanging

[Toasted2]

Hey Mike...I don't think you are missing anything obvious...Unfortunately, I liked this story from the get go, but have been very disappointed the way things have been panning out. The problem in my opinion is managements communication to investors has been very spotty...and as we all know investors don't like surprises. IMO it has been a constant case of over promise and under deliver

[molymoney]

In these markets  stocks don't trade at net asset value. The problem we have is we can't sit idle on theseflows and in 2009 we wanted to drill say 3 targets. WE were counting on loads of dough to implementand develop more gas. Management never lets the balance of cash go to zero. We are going tobe cash flow positive in 2009, how positive even the analyst don't know because the

[mikerosoft666]

So sounds like patience maybe the best attribute for this play.  I'm not underwater much,  started getting in .33¢ as I fully expected the cash flow to be golden.  Didn't see all these other problems coming.  Who could have even imagined that TOO MUCH PRODUCT could be a problem.Thanks to you and Moly for response.  Helpful to understand that I am not holding a

[mjl777]

Based on the company's financial model, Durango would be valued at $143MM using the most conservative assumptions for the backout (vs. > $200MM using more favourable assumptions). That's approximately 25% of the company's market cap.I think everyone posting has an appreciation of the time value of money and would prefer that the cash flow be realized sooner rather than later