RE:Pony upside 265% to 420% based on peer competitor valuation All the power to you if you choose to invest in CR at $18,000 per boe/d instead of Pony at $8,000 per boe/d. Everyone has their reasons...
bigreturn11 wrote: Read below to see why a 265% to 420% upside for pony is warranted immediately without even considering a change in sentiment for nat gas producers. This upside is based only on falling in line within the current peer group valuations (as you will see below) and does not account for improving sentiment for nat gas companies. *Updated valuation based on revised calculations (subtracted net debt).
What if we believe the Pony deserves a very conservative valuation of $13,100 per boe/d which is equal to the cheapest peer in the nat gas grouping (Nuvista). This is the absolute lowest valuation based on nat gas peers.
$13,100 boe/d valuation x 53,000 boe/d production = $694 million lowest end of fair value
$694,000,000 vaue subtract $320,000,000 of net debt = $374,000,000
Lowest end of fair value = $374,000,000 divided by 161,000,000 shares
=$2.30 per share
At the absolute lowest end of the the peer group valuation, Pony should be worth $2.30 or a 265% upside.
If we gave pony a fair current value of $16,000 per boe which is still below the mean peer group average, we could project pony at $3.30 per share, or an upside of 420%.
These projected valuations exclude a premium that nat gas producers may have coming their way. Nat gas companies have still been hit hard relative to US gas companies who have received premiums due to increased upcoming demand (associated gas shut-ins).
Nat Gas peer valuations with daily production organized from large to small producer. See where Pony would fit at a valuation of $13,100 per boe/d which would be very reasonable.
TOU - $20,000 per boe/d (300,000 boe/d)
ARC Res - $20,000 per boe/d (147,000 boe/d)
BIR - $15,000 per boe/d (78,000 boe/d)
Peyto - $21,500 per boe/d (77,000 boe/d)
NuVista - $13,100 per BOE/d. (57,000 boe/d currently)
Pony - $7,800 per boe/d (53,000 boe/d)
Advantage - $16,500 per boe/d (44,000 boe/d)
Crew - $18,000 per barrell equivalent per day (22,000 boe/d)