GREY:STPJF - Post by User
Post by
Box927on Feb 22, 2008 11:11am
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Post# 14527339
Canaccord still has $3 target
Canaccord still has $3 targetSouthern Pacific Resource (STP : TSX-V : $1.00) - Speculative Buy -
Trarget: C$3.00
Richard Wyman
Comment: Operational update -- impact is positive; maintain C$3 target
price and SPECULATIVE BUY recommendation
Southern Pacific provided an update on its winter drilling program.
Southern Pacific is at an intermediate stage of completing its winter
drilling program. The drilling results to date have been encouraging,
especially at McKay River, where the company believes there is potential
for at least one and possibly two commercial SAGD projects. Long Lake
drilling results are also encouraging, but no details are available for
competitive reasons. We maintain our SPECULATIVE BUY recommendation and 12-
month target price of C$3.00. Our target price is based on an after-tax,
risk-adjusted, contingent asset valuation of ultimately achieving 100,000
b/d from SAGD projects on Southern Pacific's five areas. Southern Pacific
trades at about 36% of the estimate of contingent asset value of $2.76,
which is based on conservative commodity price assumptions. Using average
long-term futures strip prices of US$93.29/bbl (2008 to 2015) for West
Texas Intermediate crude oil, the estimated contingent value of Southern
Pacific increases to about $6.21 per share.