Post by
Nawaralsaadi on Apr 23, 2012 7:30pm
massive undervalution
This morning I received the valuation table issued by TD waterhouse for 30 O&G Canadian companies of comparable size to Equal Energy, out of the table only two trade at a lower valuation to Equal:
Perpetual Energy (90% NG, 9 D/CF) – no dividend ($23K per flowing barrel, 58% NAV)
Nuvista (70% NG 3.6 D/CF) – no dividend ($23K per flowing barrel, 59% of NAV)
As a matter of fact, Equal does not even trade at the valuation of those two natural gas producers:
Advantage (94% NG, 6.6 D/CF) - no dividend ($35K per flowing barrel, 55% og NAV)
Cequence (88% NG, 4.2 D/CF) – no dividend ($32.5K per flowing barrel, 43% of NAV)
Companies with 50% NG-50% Liquids, trade at the following multiples:
Crew Energy 51% NG - $40K per flowing barrel (50% of NAV) – no dividend
NAL Energy 53% NG - $62K per flowing barrel (79% of NAV) – dividend, being acquired
Pengrowth 49% NG - $70K per flowing barrel (70% of NAV) – dividend
Bonevista 61% NG - $56K per flowing barrel (71% of NAV) – dividend
Enerplus 56% NG - $61K per flowing barrel (73% of NAV – dividend
Average: 54% NG – $57.8K per flowing barrel (68.6% of NAV)
At the per flowing barrel valuation Equal would trade at $11.9 per share
At 68.6% of NAV valuation Equal would trade at $5.5 using $8 as a base NAV
A blind between those two would give us $8.7
Currently Equal trades at $26K per flowing barrel, and 37% of NAV, no company with 50% liquids and 2.4 CF (Mississippian adjusted) trade at such metrics. None. As a matter of fact Perpetual with 9 times debt to cash flow and 90% NG production trades at a better NAV valuation to us, and almost the same on per flowing barrel.
Regards,
Nawar