Keep your eye on the ball
OUR TAKE: While SPE's 2018 production guidance came in slightly below street expectations (we have moved our forecast down ~3%), we believe the temporary moderation is reasonable and largely explained by timing. SPE plans to allocate substantial 2018 capital to its Oungre Unit project, with the production additions expected to come in 2019-2020. We believe this makes sense and sets the company up to continue its growth over a multi-year period. We also note that SPE's guided opex is >5% below our previous estimate and leaves our 2018E CFPS estimate unchanged. We continue to see SPE as a "must own" name and reiterate that the company has been one of the top performers in per share growth/preservation within the North American industry during the down cycle (see our recent report). In our view, the company offers an exceptional growth plus free cash flow proposition (~5% 2018E FCF yield after growth capital), with significant oil price upside and a compelling valuation.