Ccord initiates coverage Whitecap Resources Inc. (WCP : TSX : C$10.20) - Buy - Target:C$13.00
Sustainable Viking players with a cost of capital edge; Initiating coverage of RRX and WCP
Two Saskatchewan Viking oil focused operators with proven management teams With this publication, we are initiating coverage of Raging River Exploration (RRX: TSX) with a BUY rating and C$5.50 target and Whitecap Resources (WCP: TSX) with a BUY rating and C$13.00 target price. Both companies are led by experienced management teams with a history of successfully creating shareholder value. We believe these stocks offer superior share price appreciation potential owing to: 1. Strategic positions in one of the largest light oil plays in the Basin. Both Raging River and Whitecap offer investors significant exposure to the Saskatchewan Viking light oil play in the greater Dodsland area that contains an estimated six billion barrels of original oil in place. Technology and improved operational efficiencies have increased already robust well economics across the play, which continues to expand in the halo areas with additional step out drilling efforts. 2. Organic sustainability that is
rewarded by the market. RRX has reached critical mass and has grown its asset base into a free cash flow generating model. WCP maintains one of the lowest total payout ratios in the high yield E&P group at a 96%/94% forecast in 2013/2014.