TSXV:CEN.H - Post by User
Post by
vlieton Nov 12, 2009 11:46am
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Post# 16479731
Cannaccord upgrade this morning
Cannaccord upgrade this morningRECOMMENDATION CHANGES - TARGET PRICE REVISIONS
Coastal Energy (CEN : TSX-V : $5.17) - Speculative Buy - Target: C$6.75 Frederick Kozak
Comment: Maintaining SPECULATIVE BUY rating, raising target price to C$6.75 from C$5.50
We continue to rate the shares of Coastal Energy a SPECULATIVE BUY, after having been restricted due to the company's recent C$34.5 million financing. The company is proceeding with an accelerated offshore exploration and development program as a result of the new equity. With additional equity capital, the company is planning an accelerated program that includes exploration drilling at the Songkhla B prospect and development of the Bua Ban oil field. In addition to completing remediation activities on the Songkhla A producing field, Coastal also may drill one or two other exploration prospects in the immediate area. We are increasing our target price to C$6.75 (up from C$5.50), but maintain our SPECULATIVE BUY recommendation. Our target price is based on our estimate of the company's 3P reserves value after-tax, discounted at 10%. Our target does not include any potential upside for future exploration discoveries. The next catalyst should be the results of the workovers conducted on the first two Songkhla production wells plus the third production well which experienced premature water inflow. Coastal should commence exploration drilling on the Songkhla B structure around the end of November. If successful, two to four wells could be drilled on the prospect with production on-stream by late Q1/10.