Pine Cliff Energy Ltd T.PNE

From today's G&M

[parcheg]

Desjardins Securities’ Chris MacCulloch raised his target for Pine Cliff Energy Ltd. (PNE-T) to $1.90 from $1.75 with a “buy” rating, while Canaccord Genuity’s Mike Mueller to $1.75 from $1.65 with a “buy” rating. The average is $1.94.

“We are increasing our target on Pine Cliff ... reflecting positive estimate revisions stemming from the acquisition of Certus Oil and Gas Inc.; this was highly accretive, due in part to the reintroduction of financial leverage to the business model,” he said. “Beyond financial accretion, increased scale and an expanded Alberta Deep Basin drilling inventory, the transaction also significantly reduced the company’s sensitivity to natural gas prices while improving dividend sustainability.”

[Maxmoe]

Wow. Hardly inspiring. Being a cynic, I'd bet the target would be much higher if there was an equity financing to be done. No big fat equity deal fees equals no 50% upside target. My threshold for small/mid cap energy investments is 100% potential within 1 year. For Pne that means a spike in gas prices must happen. 

[TheRexmember]

They are all conservative in the estimates now. The research also came out before the price rise. The price increase plus 13 cent dividend is a decent total return.  the whole point is that they dont need higher gas prices now with a bit more liquids. Now they can fully operate with lower prices and still pay the dividend.  The debt doesnt matter that much. If they borrowed the whole

[kavern23]

Doesn't Certus make more sense for Bonterra to buy than Pine Cliff? Certus assets need a drilling program and capex in 2024 to really get the potential out of the drilling locations. BNE could have afforded a  30-40m capex into Cetrus assets if they pull back in Cardium....as BNE has 4-5k per day of legacy oil production. As history has shown, it is very hard to spend capital on

[TheRexmember]

It would not be as internally accretive as bne wants. They want acreage nearer their facilities for that kind of money. PNE will just strip costs out because it is low decline production. Maybe they go from 2-3 wells per year to 3-5 wells now. BNE also mentioned wanting at least 60% liquids if possible.  back before they got into oilsands CNQ would do takeovers like that a lot. They

[kavern23]

Yeah but Rex, why would one assume PNE doesnt want to drill Certus locations as soon as possible? If PNE is borrowing some amount..they have stated yet...but at the interest rates PNE is paying...dont you need some unlocked value from the drilling locations. Time value of money for having bought drilling locations and in my opinion, PNE probably paid a decent value for future drilling locations.