发帖
雷达卡
A Trio of Solid Gas Plays
April 29, 2008
Kristian Schneck, MBA (403-509-1938, kschneck@haywood.com)
Alex Tran, CFA (403-509-1810, atran@haywood.com)
Junior Natural
Gas Producers
Our outlook for natural gas has improved, as North American natural gas markets have recovered significantly from two years of weakening prices. Over the last two years, Canadian natural gas producers have endured softening natural gas prices from record 2005 levels, an inflationary cost environment, the elimination of an exit strategy for many juniors with the federal government’s ruling on income trusts, and the most recent reworking of Alberta’s royalty structure. Based on our positive outlook, we have initiated coverage of three natural gas-focused junior producers that we believe will provide solid growth and above average returns through our 2009 outlook:
Please see pages
78 - 80 for full rating structures, important disclosures, risk parameters and disclaimers.
Sources: Open Range,
Profound, and Vero
Open Range Energy Corp. (ONR-T, $4.85)
SECTOR OUTPERFORM; Target: $6.00; Risk: SPECULATIVE
Open Range is an emerging junior producer that was created through the Plan of Arrangement between Tempest Energy and Daylight Energy Trust in late 2005. With a focus on expanding its core area at Ansell/Sundance, Open Range has grown its corporate production base organically to approximately 2,100 boe/d, and has recently announced an emerging exploration area at Rough, which we believe could be a significant leg of future growth for the company.
Profound Energy Inc. (PFX-T, $3.86)
SECTOR OUTPERFORM; Target: $5.00; Risk: SPECULATIVE
Profound is a junior producer focused on natural gas that emerged through the reverse take-over of Cork Exploration in late 2007. With a current production base of 3,400 boe/d, a drilling inventory of over 50 locations, and an expanding asset base that now includes the Peace River Arch, we believe Profound will continue to grow through a combination of organic exploration and development activities within its existing asset base and accretive acquisitions.
Vero Energy Inc. (VRO-T, $8.80)
SECTOR OUTPERFORM; Target: $11.50; Risk: SPECULATIVE
Vero Energy is a junior natural gas producer that emerged as the exploreco from the True Energy/TKE Energy Trust Plan of Arrangement in late 2005. With a core focus in west central Alberta, Vero has grown its production base from 850 boe/d at inception to a current level of 5,900 boe/d. 2007 was a year of solid capital and operating efficiencies for Vero, which we expect to continue in 2008 and beyond.
TABLE OF CONTENTS
REFOCUSING ON NATURAL GAS PRODUCERS.........................................................................................................................3
2007 PAIN SETS UP STRONG 2008 GAINS......................................................................................................................................4
WCSB SHOWING ITS AGE.................................................................................................................................................................6
UNCONVENTIONAL NATURAL GAS PLAYS GAINING MOMENTUM....................................................................................9
CANADIAN GAS DRILLING HAS SOFTENED CONSIDERABLY.............................................................................................11
U.S. NATURAL GAS DRILLING SHOWING SIGNS OF SLOWING...........................................................................................13
SUPPLY OVERHANG STEADILY WORKING OFF......................................................................................................................14
ELECTRIC POWER GENERATION DRIVING DEMAND MIX..................................................................................................15
LNG A GROWING SOURCE OF NORTH AMERICAN SUPPLY................................................................................................16
OPEN RANGE ENERGY CORP. (ONR–T, $4.85)...........................................................................................................................21
ROUGHING IT IN THE DEEP BASIN....................................................................................................................................................21
EXECUTIVE SUMMARY..................................................................................................................................................................22
INVESTMENT THESIS......................................................................................................................................................................24
VALUATION AND TARGET PRICE...............................................................................................................................................24
RISKS..................................................................................................................................................................................................25
PEER COMPARISON.........................................................................................................................................................................26
ASSET BASE OVERVIEW.................................................................................................................................................................27
ANSELL/SUNDANCE............................................................................................................................................................................28
ROUGH................................................................................................................................................................................................30
FERRIER, GARRINGTON, BIG BEND.....................................................................................................................................................31
FORECAST...........................................................................................................................................................................................32
CAPITAL STRUCTURE.....................................................................................................................................................................33
COMPANY HISTORY AND LEADERSHIP....................................................................................................................................34
FINANCIAL STATEMENTS..............................................................................................................................................................37
RESERVE DATA.................................................................................................................................................................................40
PROFOUND ENERGY INC. (PFX–T, $3.86)....................................................................................................................................41
SUCCESSFUL TEAM BUILDS FAMILIAR PLAYS....................................................................................................................................41
EXECUTIVE SUMMARY..................................................................................................................................................................42
INVESTMENT THESIS......................................................................................................................................................................44
VALUATION AND TARGET PRICE...............................................................................................................................................44
RISKS..................................................................................................................................................................................................45
PEER COMPARISON.........................................................................................................................................................................46
ASSET BASE OVERVIEW.................................................................................................................................................................47
WEST CENTRAL ALBERTA..................................................................................................................................................................48
PEACE RIVER ARCH............................................................................................................................................................................49
FORECAST...........................................................................................................................................................................................51
CAPITAL STRUCTURE.....................................................................................................................................................................52
COMPANY HISTORY AND LEADERSHIP....................................................................................................................................54
FINANCIALS........................................................................................................................................................................................56
RESERVES DATA...............................................................................................................................................................................59
VERO ENERGY INC. (VRO–T, $8.80)..............................................................................................................................................60
FINDING MORE FOR LESS...................................................................................................................................................................60
EXECUTIVE SUMMARY..................................................................................................................................................................61
INVESTMENT THESIS......................................................................................................................................................................63
VALUATION AND TARGET PRICE...............................................................................................................................................63
RISKS..................................................................................................................................................................................................65
PEER COMPARISON.........................................................................................................................................................................65
ASSET BASE OVERVIEW.................................................................................................................................................................66
EDSON................................................................................................................................................................................................67
CORBETT............................................................................................................................................................................................69
WILSON CREEK...................................................................................................................................................................................69
WHITECOURT......................................................................................................................................................................................69
RICINUS..............................................................................................................................................................................................69
FORECAST...........................................................................................................................................................................................70
CAPITAL STRUCTURE.....................................................................................................................................................................71
COMPANY HISTORY AND LEADERSHIP....................................................................................................................................72
FINANCIALS........................................................................................................................................................................................74
RESERVES DATA...............................................................................................................................................................................77
DISTRIBUTION.....................................................................................................................................................................................78
ANALYST CERTIFICATION...................................................................................................................................................................78
IMPORTANT DISCLOSURES..................................................................................................................................................................78
RATING STRUCTURE...........................................................................................................................................................................78
RISK PROFILE PARAMETERS...............................................................................................................................................................79
DISCLAIMERS......................................................................................................................................................................................80
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