TD Investment Conclusion
In spite of the disappointing quarterly results and production volatility, we highlight that Pinecrest continues to provide strong y/y production growth, y/y cash flow growth and, in our view, has superior balance sheet
flexibility to many of its peers. Although we are discouraged by Q1 production, higher quarterly operating
costs and operational delays, we believe that Pinecrest’s intrinsic value exceeds it current share price. We
highlight that our 2P NAV of $1.36/share represents material (48%) upside to yesterday’s closing price. We understand investor’s hesitation to buying the shares with few medium term catalysts on the horizon. However, given the positive attributes outlined above, we believe Pinecrest may become an attractive acquisition target.
That said, without a strained balance sheet, there is likely little motivation for the company to pursue this
option. We are reiterating our $2.00 target price and BUY rating.