Post by
RockLobster1 on Jun 13, 2011 10:15am
canaccord comments - tgt $0.45
Longford Energy (LFD : TSX-V : C
.25) - Speculative Buy - Target:C
.45
A step in the right direction
Q1/11 results: Longford reported financial results on May 31 while we were restricted due to the company's financing. G&A expenses were below our estimates at
.4 million versus
.8 million, which contributed to the better-than-expected cash position at quarter end of
.7 million. Negative cash flow of
.4 million (
.00/share) and a loss of $1.0 million (
.00/share) were fairly immaterial. Drilling permit received, appraisal location finalized. With approval in hand from the Kurdistan Regional Government (KRG), Longford has confirmed a drilling location for the Chia Surkh-10 appraisal well, twinning a legacy 4,875 bbl/d discovery on its operated Chia Surkh PSC. The company expects to spud the well in Q3/11 at a cost of $15-$20 million gross ($9.5-$12 million net). Financing sets stage for drilling. With completion of the recent $7.5 million financing ($7.1 million net proceeds), Longford has a sufficient cash balance of approximately $8 million to begin drilling the CS-10 well.
We expect the company will raise additional capital of $15 million over the quarter to complete and test the CS-10 well and prepare for early production upon success. This dilution is factored into our valuation estimates. We maintain our SPECULATIVE BUY rating and C
.45 12-month target. We utilize a risked-exploration valuation approach to arrive at a risked exploration upside of
.55/share and $1.98/share unrisked based on a $100 flat real price deck. Adjusting for dilution from the expected financing, we arrive at risked portfolio NAV of
.48 per share to underpin our target price.
Comment by
cookster9 on Jun 21, 2011 12:10pm
This post has been removed in accordance with Community Policy
Comment by
maysteeler23 on Jun 21, 2011 12:56pm
Anyone selling now is committing suicide