Jennings Capital Here's yesterdays analyst report in reaction to the latest earnings. GLTA
Q1 FINANCIAL AND OPERATING RESULTS
REDUCED BY INVENTORY BUILD-UP
?? Inventory build masks results that were otherwise
mostly in line. Winstar had an inventory increase of
33,000 Bbl during Q1, which yielded a sales rate of
1,853 BOE/d, whereas production was 2,192 BOE/d.
That inventory was subsequently sold in early April,
but it did reduce bookable revenue, earnings and cash
flow for the quarter. Absent that build-up, we estimate
cash flow would have been
.39 per share.
(pages 2-3)
?? Gas sales are significantly up. We had expected
deeper effects from STEG’s continuing operations
issues. Instead, the Company’s gas sales in Q1 were
4.2 MMcf/d, well above our estimates. This is major
progress, and we have increased the upper limit on
our production forecast going forward. (pages 2, 4)
?? Operations Update. Winstar has four projects left in
its 2012 capital program including the workovers of
CS Sil -10 and Ech Chouech-4, drilling the Sabria-12
well and re-activation of the Zinnia field. The
Company’s costs will be $15.3 million, and the
program should add between 1,100 – 1,900 BOE/d.
(page 3)
?? Labour unrest in April could continue into May.
Having survived the Arab Spring without serious
disruption, the Company experienced its first ever
labour dispute that led to a three-day strike in late
April, with another strike threatened if negotiations
prove unsuccessful. (page 3)
We are maintaining our recommendation of
SPECULATIVE BUY and our 12-month target price of
C$6.25 per share.