Mart Resources Inc MAUXF

Cormark $2 price target

[jd43xl]

Mart Resources (MMT-T, $1.59) - Buy, $2.00 Target, Garett Ursu: With Brent crude pricing currently just under US$113.00/B and the approaching (imminent) completion of the Umugini pipeline in Nigeria, we encourage investors to once again review Mart Resources given Mart's leverage to crude oil and potential for a material near-term increase in production and cash flow. Completion of the Umugini pipeline connecting Mart's Umusadege field to Shell's Forcados export system is expected this month with commissioning and line-fill expected to take up to 4 weeks, at which time gross production from Umusadege is expected to increase to 25 MB/d from 12.5 MB/d (last reported) with no additional drilling required to increase volumes. Given Brent pricing, Q2/14 cash flow should also be strong and result in a sustainability ratio well below 100% (capex and dividends). With an active M&A environment in Nigeria and more than $50 MM in deposits on opportunities currently outstanding, we believe Mart could also be active acquiring producing assets. Trading at a very attractive 2.7x 2015 DACF and imminent catalyst, we recommend investors with a higher political risk tolerance aggressively accumulate shares of Mart ahead of completion of the Umugini pipeline. We reiterate our BUY rating and $2.00 target on Mart Resources. -