TRILOGY ENERGY CORP. T.TET

SCOTIA HAS 18.50 PRICE TARGET

[ilovetoshortem1]

Company Profile Trilogy Energy Corp. is a gas-weighted Canadian Intermediate E&P company, focused in Kaybob and Grande Prairie, Alberta. Over the past several years, Trilogy has allocated the majority of its capital to Kaybob, which currently accounts for ~90% of total production. Trilogy's Kaybob asset features multiple Montney light oil pool, Montney gas, and liquids-rich Duvernay gas potential. Business Mix (Based on revenues unless otherwise noted) Production: 60% Natural Gas, 40% Oil and NGLs (100% Canadian) Comparable Companies (TSX unless otherwise noted) RMP, KEL, BIR, AAV Recent Update Text as of 9DEC14 . TET announced the elimination of its $0.03 monthly dividend (annual savings of ~$53 million) and a $250 million capex budget for next year. . No more divvy. While on the surface the elimination of its dividend could be taken as a negative, we view this as a smart move, as we think investors that own the stock did not typically own TET for its dividend. The 2015E capex program at $250 million is below our forecast of $350 million, but production guided at 35,000 boe/d is a positive (flat to 2014E levels). At US$65/bbl WTI and $3.75/mcf AECO, TET is spending 1.25x forecasted cash flow of ~$200 million. TET also noted that it is seeking outside sources of capital to develop its Duvernay acreage. We provide a valuation of TET's Duvernay with TET estimates run at US$65/bbl & $3.75/mcf AECO - at those commodity prices, TET trades at 7.5x 2015E EV/DACF. If we assume $5,000 of value per Duvernay acre, then TET's underlying production base trades at 5.1x 15E EV/DACF. . Love the Risk/Reward. While we think there is potential for more downside given oil's current trend, we love the risk/reward trade-off at these levels. In our opinion, the stock is trading like the company is going bankrupt - which we believe is far from the case. We believe that the Duvernay will work, and that once commodities rebound, the stock could be a double or better from here. . Our rating remains SP; our target moves to $18.50/share (prev. $20).

[Barkingfish]

Actually as of today the average 12 month target price is C$19.13

[sellthefarm]

I think TET will come out of this fine with the ownership of the Riddell's.  Their debt to cash flow tatio is high and going to get higher this year with prices at these levels.  But they have great relationships with their senior lenders and insiders have deep pockets to support the company.  However, the price targets from Scotia are way off as they are using price decks with

[Roberto8024]

Cut that price by target by 40%. That was on $4 NG pricing, its $2.90 now.