Union Securities update
Stock Rating: Buy Target Price: $1.20 (previously
.90)
Valuation and Recommendation
In developing the Umusadege Field, Mart has drilled a series of highly productive wells, and the latest has every indication of being economic.
We maintain our Buy recommendation and are increasing our target to $1.20 from
.90. The new target is a 2.1 time multiple of our 2012 cash flow estimate of
.57, and is in line with our other junior producers. We expect the stock to continue to perform as the geological risk of developing this discovery is minimal, and there are several additional drilling locations that will keep the growth profile intact throughout next year.
Our cash flow forecast does include the UMU 9 well, and will be adjusted when the production volumes and timing are known.
Since the junior oil sector began recovering earlier this fall, Mart has been an outperforming stock, a situation we believe will continue.