Post by
teevee on Jul 18, 2011 9:33am
CLT comments
Celtic Exploration* (CLT : TSX : $23.76), Net Change: 1.33, % Change: 5.93%, Volume: 736,043
Holy M&A premiums, Batman! BHP Billiton's (BHP) plan to acquire Petrohawk Energy (HK) for US$12 billion, or US$38.75 per share in cash, a ~65% premium to market price, takes "full and fair value" to whole new levels. Some say BHP paid way too much for Petrohawk, but remember, like beauty, value is in the eye of the beholder – price is what you pay, value is what you get. If an acquisition works and increases shareholder value, that's great. According to Canaccord Genuity Oil & Gas Analyst Brian Kristjansen, Celtic is the "go-to" natural gas-weighted stock in the Canaccord Genuity coverage universe and is ripe for takeover. The company’s gas resource upside is nearly unrivalled in the intermediate sector (or the large-cap sector for that matter, as the company is the second-largest Montney landholder in the country). Kristjansen believes Celtic's low-cost operations and sub-$2.00-per-Mcf AECO breakeven economics are only set to improve as the company’s scale and increasing infrastructure control evolve. Expect the company’s next catalysts to come in late July when numerous well results are released (Montney activity at Resthaven and Fir and from vertical drilling in the Duvernay at Kaybob) and the company’s gathering system and compression facility is completed at Resthaven. There should also be dramatic increases in competitor Duvernay Shale drilling this summer that should serve to prove up additional Celtic acreage. With the high dollars being spent at Crown sale adjacent to the company, and the finite amount of available land left, Kristjansen believes Celtic may be a target for larger
operators like Chevron (CVX) at levels way higher than current share price.