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Niko Resources Ltd NKRSF

Niko Resources Ltd is an oil and natural gas exploration and production company.


GREY:NKRSF - Post by User

Bullboard Posts
Post by monzieon Oct 22, 2014 11:25am
192 Views
Post# 23050979

Scotia update is in

Scotia update is in
Recent Update Text as of 21OCT14
. The Government of India officially revised its gas pricing formula, effective
November 1, 2014, from $4.20/mmBtu to $5.61/mmBtu. We see this as positive, but
perhaps not enough to get Niko out of its current financial constraints.
 
. Under our revised price outlook and assuming capital expenditures remain flat at
~$70M, we estimate operating cash flow of $30M and $37M in 2015F and 2016F,
respectively, would leave a significant gap in funding. That said, capital
spending in F2016 could increase substantially to $150M-$200M with D6
development should the operator, Reliance, elect to do so.
 
. Given current expectations for natural gas prices and potential financial
difficulties ahead, we have downgraded Niko Resources to a Sector Underperform
rating (from Sector Perform) and have lowered our one-year target price to $0.55
(from $2.50) per share based on our revised risked NAVPS estimate of $0.52 (was
$2.71).
 
. In our opinion, revenues from the revised price may not be sufficient for Niko
to continue its operations without another significant injection of cash (needs
to be asset sales).
 
Bullboard Posts