GREY:PEYTF - Post by User
Post by
gwplanton Aug 14, 2012 11:28am
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Post# 20215110
Scotia comments on Q2 results
Scotia comments on Q2 results Parallel Energy Trust (PLT.UN-T C$6.26) Patrick Bryden, CFA - 403-213-7750
(Scotia Capital Inc. - Canada)
Operational Curtailments & NGL Pricing Reduces Drilling Activity & Production Guidance
Event
¦ Parallel announced its second quarter 2012 operating results.
Implications
¦ CFPU behind expectations and production in line. Funds flow per unit of
.20 was below
our estimate at
.25. The difference was mainly due to lower liquids realized pricing.
Production volumes of 6,790 boe/d (65% liquids) were in line with our estimates and Q2
exit production was ~7,000 boe/d.
¦ NGL pricing pressure reduces drilling activity and production guidance. PLT reduced its
production guidance 4% to 7,000 - 7,300 boe/d with a corresponding exit rate of 7,200
boe/d for the period from April 2012 to March 2013. PLT maintained its $24 mm capital
budget for the year with the intention of shifting its capital to smaller acquisitions (100 -
200 boe/d) in the area.
¦ Sustainability is challenged for 2012E. Parallel's effective payout inflates to 198% for
2012E on reduced production volumes for 2H/12 and is buoyed by the company's high
DRIP participation of ~75%.
Recommendation
¦ We maintain our 2-SP rating and our 1-year price target of $8.00/unit.