TD on TBE Twin Butte Energy Ltd.
(TBE-T) C$1.67
Q2 Largely Pre Released: Waiting For Wildmere Results
Event
Provides Q2 Results (Key Data Points Previously Released).
Impact
NEUTRAL — Twin Butte formally released Q2/13 results, although they are of little consequence as the company previously released quarterly corporate production and reduced 2013 capex/production guidance. See our previously published note: Operational Update Re-Opens Primate Wound (July 15, 2013)
Looking ahead, investors should look beyond the challenges Twin Butte has experienced at Primate, given that the area has virtually been written out of the company’s guidance (and our estimates). We believe that investor attention should be focused on the company’s horizontal drilling program at Wildmere, which could ultimate serve to replace Primate. However, given the operational challenges experienced year-to-date, investors should understandably be cautious.
Although we acknowledge our target price equates to a 12-month total return of 46%, we would like to see evidence of operational success at Wildmere prior to upgrading our rating. This confirmation may come in the form of a corporate operational update planned for late September. Until then, we reiterate our HOLD rating with an unchanged $2.25 target price.