ATB Capital Markets analyst Patrick O’Rourke views TORC Oil & Gas Ltd.’s ( increase
) strategic combination with Whitecap Resources Inc.( increase
) as a “positive.” “Although we view TOG as a strong operator, with noteworthy institutional sponsorship from CPPIB and a solid track record of execution, the strength of the combined pro-forma entity and potential upside (our TOG target price as a read-through of our WCP target increases with this announcement) presents a very appealing larger oily entity for institutional investors,” he said.
In a research note released before the bell, Mr. O’Rourke moved TORC to “tender” from “outperform” with a $3.27 target, up from $3. The average is $2.59.
Elsewhere, Canaccord Genuity’s Anthony Petrucci raised his target for Whitecap shares to $5.50 from $3, maintaining a “buy” rating.
“Considering the considerable overlap in asset bases, we view the amalgamation of these two premier Jr/Int E&P’s as favourable, particularly given the increased size and liquidity of the combined entity,” he said.
“Combined with the recent acquisition of NAL, in short order WCP has added 40,000 barrels of oil equivalent per day of production, increasing total production by over 60 per cent. As the dust settles, we believe WCP is poised to emerge from 2020 in a position of strength, given an improved balance sheet, a reduced payout ratio, and the size and scale of a major player within the light oil space in Canada.”