from Scotia Daily Edge ■ Longview announced Q4/13 results and 2013 reserves.
■ Reserves. LNV announced 2P reserves of 37.9 mmboe, -1% YoY on a debt-adjusted per share basis. 2P FD&A costs (incl. FDC) of $31.45/boe lead to a 1.0x recycle ratio, which indicates minimal value creation throughout the past year. LNV pegs its 2P NAVPS at
$11.23/share (10% BT).
■ Q4 Behind. Q4 volumes of 5,816 boe/d were behind expectations due to extreme cold weather conditions that prevented LNV from placing new volumes onstream. Year over year, volumes are down 4% from 2012 levels, and 5% on a debt-adj./sh basis. CFPS was $0.29. Longview
cautioned that the Safety Order issued by the NEB on the Nova Gas Transmission System could affect production from its Nevis property but did not know the extent of the impact (if any) or the duration.
■ Our view. In the absence of a strategic bid for LNV, as a going concern, we believe the stock will likely struggle to hold its valuation given its flat growth profile. In our opinion, we could see the shares retreat to the $4.50-$5.00 level, implying a 2014E EV/DACF multiple of ~4.6-4.9x. Demonstrated operational performance will likely be required by investors before we see a higher multiple.
■ We maintain our SP rating. Target price $5.75.