EQU target to $6
Equal Energy Ltd. (T-EQU) $3.02 (Intraday)
Recommendation: Buy (unchanged), Target: $6.00 (increased, previously $5.00)
New Source IPO Should Drive New “Equal” Valuation
- A new valuation comp for Equal (New Source Energy partnership, NSLP on NASDAQ) has priced its IPO this morning.
- Like Equal, NSLP is a pure play in Oklahoma’s Hunton play.
- On an EV per daily flowing boe basis we have Equal trading at ~$16,500 per flowing boe as compared to New Source at ~$45,200 per flowing boe.
- If we value Equal at New Source IPO valuation we would arrive at a valuation of ~$9.00 per share.
- We are raising our target to $6.00 (from $5.00) which represents two-thirds of the New Source IPO valuation. We reiterate our BUY rating with a SPECULATIVE risk rating