Long Run Explor Ltd Ord WFREF

From CIBC

[peplare]

December 16, 2014

Oil & Gas - Dividend Corporations

Stock Rating: SE C T O R PE R F O R M E R

Sector Weighting: M A R K E T WE I GH T

Key Ratios and Statistics

12-18 mo. Price Target $3.50

LRE-TSX (12/16/14) $1.34

Key Indices: None

352-5--week Range Yr. EPS Gr. Rate (E) $1.15-$6.09 NM

Shares Outstanding 193.9M

Float 160.7M Shrs

Avg. Daily Trading Vol. 1,690,000

Market Capitalization $259.8M

Dividend/Div Yield $0.21 / 15.7%

Fiscal Year Ends December

Net Asset Value $4.86 per Shr

2014 ROE (E) NM

Net Debt $719.0M

Net Asset Value Common Equity $994.0M

Convertible Available Yes

CF per Share 2013 2014 2015 2016

Current $1.83A $1.82E $1.36E $1.19E

Prior $1.83E $1.62E $1.58E

Estimates ( Valuation (Dec. 31 Dec. 31))

P/CF-Curr 0.7x 0.7x 1.0x 1.1x

P/CF-Prior 0.7x 0.8x 0.8x

EV/DACF

2014E 3.1x

2015E 3.3x

2016E 3.9x

P/RNAV 28%

Company Description

Long Run Exploration Ltd. was established through the combination of

WestFire Energy Ltd. and Guide Exploration Ltd., in October 2012. Long Run

recently announced the transition to a dividend model.

 

[bob4977]

I bought some more LRE yesterday when I saw they were substantially hedged through Q1 2015. Libya lost 500k/day of exports on the weekend and I hardly heard it mentioned in the news. That is half the supposed glut. By April, I think the shale oil production will start declining. One prediction is that it will drop by 1 million bpd by Q3. At that point the glut will be gone just from the above

[JohnJBond]

Another think that isn`t being talked about in the news is the effect on those who are holding the otherside of the hedging instruments. Producers tend to sell a large part of their production forward (hedge).     They do this, not because they want to speculate on derivatives, they do it increase the stability of future cash flow through their annual budgeting process. Someone has to

[mckenzie00]

Hi JohnJBond - Your argument is reasonable. We'll be watching closely. Thanks Gregory

[Slyincalgary]

Well thought out post JohnBond, but one thing you missed in your calculations is that the future market has probably 10 times the contracts than there actually are physical barrels of oil. I have believed for a long time that this has been a market manipulated drop as opposed to a true supply/demand one. Think about it, we have an over-production of what, 2 million-ish barrels per day in a market