Great Buying OpportunityCIBC on BXE et al
Sinopec Makes Move Into West Central Alberta (CIBC)
Implications For Undercapitalized E&Ps In AreaOn Sunday, Daylight announced that it had entered into an agreement to be
acquired by Sinopec at a price of $10.08/share. This represents a
substantial premium to both Daylight's current share price (+120%) and its
60-day weighted average share price (+44%).
Based on this, we believe the deal reflects positively on a number of
undervalued E&Ps in the west central Alberta area, notably Bellatrix, Delphi,
NuVista, PetroBakken and Vero. All five have material land positions in the
area and lack the same access to capital as their peers.
Given the deal metrics (~$81 K/Boe/d and ~$17/Boe of 2P reserves), the
implied valuation read-throughs to the other E&Ps mentioned are quite
strong, with the metrics pointing to values 35% to 311% above Friday's
closing prices.