GREY:WFREF - Post by User
Post by
retiredcfon Sep 19, 2013 8:25am
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Post# 21750757
CIBC
CIBC
| Long Run Exploration Ltd. Announces Low Cost Portfolio Consolidation |
| Long Run has entered into an agreement to purchase 1,500 Boe/d (60% liquids) for $55MM funded from the company's $450MM credit facility (now ~85% drawn). The company has also completed the sale of its 300 Boe/d Edam heavy oil property for $13MM to a private start-up. The production is located in three areas, two of which are complementary to Long Run's near-term plans. Snipe light oil is the largest asset in the package at ~750 Boe/d with infrastructure that helps with Montney oil exploration and ~525 Boe/d at Redwater adding ~50 Viking locations. Overall we find this to be a solid deal for Long Run, increasing 2014 CF by ~$14.5MM and CFPS by 6%. This is driven by the low cost of the deal, with LRE paying 3.8x 2014 CF (LRE was trading at 4.3x). Given the solid accretion from the deal, we are increasing our PT to $6.50 (from $6.00). Long Run continues to trade at a discount but given our outlook for ~10% production per share growth with a stable debt load (decreasing debt load on strip prices), a return in line with the oil peer group at ~13% PPSG plus yield, we believe the discounted multiple will fade in the near term |