Spyglass Resources Corp SGLRF

Details from TD Report.

[hawk35]

Below is a cut an paste from the TD report that explains why the target price is 1.50.


33% cut to the monthly dividend should free up $11mm in annualized cash flow.
The dividend reduction to $0.18 annually (from $0.27) may arguably have been anticipated by the market given a relatively high yield prior to announcement (16%). That said, the stock has traded up over the past day and a half, which again suggests that investors believe this to be the right choice. However, we still estimate a payout of 113% in 2015, which in our view does not leave much room to deliver the balance sheet absent a continued stream of asset sales.
 
In addition to industry risks, the key near-term risks specific to Spyglass include: 1) Net debt represents a meaningful proportion of the total enterprise and asset value, which increases the potential for volatility in the calculation of our target price; 2) the short corporate history and the number of consolidated entities could result in a higher margin of error in our forecasts; 3) operating costs are high, especially given the liquids/natural gas split; and 4) cash flow netbacks are relatively low compared with the peer group, which could affect the company’s ability to repay corporate debt and lead to greater volatility in reported financial results.
 
TD Investment Conclusion
Our view continues to be that debt and the current cost structure are two
meaningful challenges that Spyglass needs to overcome in order to increase
the flow of incremental investment dollars into the company. Unfortunately,
asset sales and the dividend cut alone are not likely sufficient to meaningfully
reduce leverage, compounded by operational challenges at the company's
marquee Dixonville Montney waterflood project. Our target drops to $1.50
(from $1.65) but we remain HOLD rated based on a 1% total return.

[leo101]

thank you for the excellent information.

[ggrellette]

This post has been removed in accordance with Community Policy

[sanityseeker]

Anyone whose views or investment decision are swayed by this TD report should strongly consider discontinuing their investing activities. Everything stated in their report is abundantly obvious from reading the quarterly and annual reports. If you dont read those you are consciously choosing to make uninformed decisions. The only info this report adds is a guess at the share price in one year. How

[Joe454]

This post has been removed in accordance with Community Policy

[darkstream]

good post seeker -looks like Q3 has to show a loss -think Dixonville still faces problems -once the EPA gets involved you need deep pockets to shake them off -prudent mngt. should have set the dividend at .12 cents and been done with it -TD Investment has a staff of kids for the most part working for donuts -I too bailed last week and cut my losses but kept a 1000 shares as a reminder -this one