Update tonight
This was issued in February, when the stock was $1.32 - Update tonight could be catalytic.
We are maintaining our $2.25 target. Our target is currently based on multiples of 6.0x our 2013 DACF of $114 million (pre-hedging), and 1.0x our pre-tax blow-down 2012 NAV estimate of $2.09/share.
Overall, while the Slave Point play may not have the best single well economics compared to other resource plays (Montney Oil, Cardium), the potential upside generated from a successful waterflood program would materially change the single well economics and overall P/I ratio for the play. If the waterflood is proven successful, Pinecrest stands to see material production growth at very minimal costs for 2013 and 2014. At the current valuation (3.7x), low debt (D/CF 1.2x), and high PPS and CFPS growth relative to other names, we believe Pinecrest presents an attractive buying opportunity. As such, we maintain our Outperform rating.