PrairieSky Royalty (PSK‐TSX); HOLD, C$15.50 ― Solid Q4: raising production forecasts, but reducing target & rating due to lower oil prices
Companies: PrairieSky Royalty Ltd
Calfrac Well Services (CFW-TSX); HOLD, C$1.50 | PrairieSky Royalty (PSK-TSX); BUY, C$17.50
Companies: Calfrac Well Services Ltd. (CFW:TSE)PrairieSky Royalty Ltd (PSK:TSE)
Enbridge (ENB-TSX); BUY, C$62.00 | Gibson Energy (GEI-TSX); BUY, C$30.00 | PrairieSky Royalty (PSK-TSX); BUY, C$17.50
Companies: ENB GEI PSK
Q3 CFPS of $0.28 (dil.) was in line with consensus, as was production, which was up 2% Q/Q (liquids up 1% Q/Q). Management continues to expect oil production to grow in Q4. We have nudged our ‘19e/’20e CFPS estimates down 2%/3%, on reductions to oil forecasts, partly offset by increased NGLs forecasts. TP lowered by $0.50 to $29.00/share, reflecting the average calculated Atax NPV5 of our new DCF model at our deck and the strip.
2Q16 net production was flat sequentially but better than expected, while cash flow missed our forecasts by $0.01/share as gas price realizations were weak due to accrual adjustments for the prior quarter. In our view the shares appear reasonably valued in the context of other oil & gas royalty peers. $29.00/share target price unchanged, but we are upgrading to Outperform.
Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly rev
Companies: AAV ARX BTE BNP CPG ERF POU PEY PGF PWT PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS NVA PPY PNE RRX RMP SRX SGY TET ATU CKE GXE IKM LXE MQL PRQ SPE SKX TVE TVETF YO
Market Impact: Neutral. Funds flow of $0.19/share was slightly behind our $0.20/share estimate, which was also the survey median. Relative to our estimates, realized prices for natural gas were weaker than expected (actual $0.67/mcf, FirstEnergy $1.25/mcf), which more than offset higher than expected net production, which once again benefitted significantly from positive prior period adjustments.
PrairieSky purchased the royalty assets that Pine Cliff Energy (TSX: PNE, covered by analyst Michael Hearn) announced on Monday that it was selling for $25 mm. PNE's Based on PNE's press release, PSK paid ~9.3x run rate EBITDAX of $2.7 mm ($2.7 mm royalty revenue expected over the next 12 months, assuming current commodity prices remain flat), which, assuming a low decline rate, seems quite reasonable and accretive to PSK.
From recent lows, we see PSK offering three factors of one-sided torque to increased commodity prices: price, drilling activity, and sliding scale royalty rates. We believe all three of these factors have bottomed and are likely to move higher over time. If not, PSK can still fund its recently revised dividend at strip pricing without drawing on cash.
With this publication we briefly summarize our projections for 1Q16e quarterly results for the Junior E&P (Intermediate, Mid & Small Cap) segments of our coverage universe
Companies: AAV ARX BTE BNP CPG ERF POU PEY PGF PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PNE RRX RMP SRX SGY TET ATU CKE GXE IKM LXE ROAOF MQL RE SPE SKX TVE TVETF YGR YO
Market Impact: Neutral. Cash flow came in slightly ahead of expectations, primarily due to prior period adjustments.
4Q15 cash flow of $60.0 mm beat expectations ($23 mm tax recovery). Production of 17,651 boe/d beat expectations. We estimate pro-forma 4Q15 clean production including the CNRL assets was ~21,250 boe/d. Management expects cash flow at the strip over the next 12 months to fully fund the dividend (~$164 mm/year), which was cut by 45%. 2016 G&A costs are expected to be flat vs. 2015. We have increased our 2016e production forecast by 2% to 21,034 boe/d, and our cash flow estimate by 8% to $177 mm (
Market Impact: Positive given PSK's financial position is better than expected. 4Q15 cash flow beat expectations, primarily due to a $23 mm current tax recovery. As expected, the dividend was cut, by 45%, and the DRIP and stock dividend program were suspended.
With this publication we highlight forecast revisions associated with our crude oil commodity price update. Concurrent within a dynamic time for E&Ps, some of which have already begun the process of 2016 capital budget downdrafts, revised estimates attempt to directionally capture a shift towards capital conservation, though severely weakened futures curves have influenced our thinking for the better part of 6 months anyway. We expect further capital investment reductions forthcoming from E&Ps i
Companies: AAV ARX BNP CPG ERF POU PEY SPE SGY TVE TOU VET GXE KEL NVA PPY BTE PGF PSK PWT VII WCP BNE CJ CR DEE JOY LTS LRE PNE RRX RMP SRX TET ATU BXO CKE IKM LXE ROAOF MQL RE SKX TVETF YGR YO
“Worse? How could they get any worse? Take a look around you, Ellen. We’re at the threshold of hell”. These are the words spoken by Clark Gris-wold in the holiday classic “Christmas Vacation”, and seem aptly suited for the general sentiment in the Canadian energy space at the moment as we roll out a summary of our regular forecast revisions extending from our most recent crude oil and natural gas price forecast update.
Companies: AAV ARX BTE BNP ERF POU PEY PGF PSK PWT VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PNE RRX RMP SRX SGY TET ATU BXO CKE GXE IKM LXE ROAOF MQL RE SPE SKX TVE TVETF YGR YO CPG
Research Tree provides access to ongoing research coverage, media content and regulatory news on PrairieSky Royalty Ltd.
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Savannah provided its interim snapshot yesterday and it is worth pointing out where it has come from and where it is going to, with a catalyst-rich future ahead of it. The Mina do Barroso project remains one of the most advanced spodumene projects in Europe and as such is very well located in terms of market (close to a main end-use market with all the freight savings – cost and carbon – that implies) and available green energy to power production. The project benefits from political support fo
Companies: Savannah Resources Plc
Phoenix copper today provides an operational update with plenty of work streams running in parallel. It continues to make progress on finalising plans for bringing the Empire oxide open pit into production after nearly completing its hydrological studies and finalising plans for a permanent mine office in Mackay – 5 miles from the proposed operation.
Companies: Phoenix Copper Ltd. (United Kingdom)
H1 2021 results
Companies: Jersey Oil & Gas PLC
Central Asia Metals (CAML LN) reported strong interim results as copper, lead and zinc prices extended their gains up 21%, 11% and 12% YTD. H1 2021 revenue of US$101m was up 42% YoY, EBITDA of US$64m was up 52% YoY and the EBITDA margin increased 5pp to 61%. With no significant other charges, net income was up 69% YoY to US$42m. Having marked to market our commodity price assumptions, our estimates are broadly unchanged meaning CAML remains well on track for a record year of earnings underpinned
Companies: Central Asia Metals Plc
Companies: Shanta Gold Limited
£8.5m equity raise at 25p for appraisal drilling
Companies: IOG PLC
No surprises in JOG’s interim results, with the market’s main focus – the company’s GBA Development farm-out process – ongoing. The resurgence of UK North Sea M&A has brought the shares back to life recently as the market is reminded of the scale of the resource and development opportunity JOG is sitting on. While JOG’s main focus remains on securing funding and a partner for its GBA Development, the company has indicated it is reviewing a number of potential acquisitions/mergers. JOG’s strong m
While the Permian was considered as a core region for the group, we believe this transaction makes sense. Given the new strategy, there is indeed a limited interest in keeping short cycle and high cost assets in the portfolio. This might also tell that, by selling the most liquid assets, divesting remains challenging. The good news is that, by distributing most of the proceeds back to the shareholders, Shell does not depend on divestments to fund its transition.
Companies: Royal Dutch Shell Plc Class A
Oil declined amid Russia's plans to boost upcoming overseas oil sales and as the dollar rallied.
Futures in New York ended the session nearly 1% lower on Friday. Russia will increase its oil exports 3% in the fourth quarter, according to Interfax. Meanwhile, gains in the US dollar reduced investor interest in commodities priced in the currency.
Despite weaker prices on Friday, US benchmark crude futures gained more than 3% this week due to tightening supplies. In the US, crude inventories
Companies: FO 88E DEC EME GTC TRIN UOG WEN
Companies: Union Jack Oil Plc
The Wressle oil field, in which Union Jack (UJO) holds a 40% working interest has achieved flow rates of 964 boepd from the primary Ashover Grit reservoir. This has been attained on a restricted choke setting and no formation water has been produced as the well continues to clean up. This is very positive news for UJO given that the reported flow rate exceeds initially forecasted rates by a substantial margin and further operations to increase gas handling capacity could increase hydrocarbon
Jersey Oil & Gas announced its interim results of which we believe the key news items are as follows:
i) The company had a cash balance of £17.06m as at 30 June 2021;
ii) The company indicated its farmout process is ongoing that that the company is engaged with both industry parties and potential infrastructure funders; and
iii) Regional electrification collaboration within the Central North Sea is building momentum amongst industry parties and the GBA is ideally located to be an integral p
Calima Energy (CE1 AU)C; Target of A$0.75 per share: Good production performance – Production in August was 3,493 boe/d, up 200 boe/d compared to July as all the new wells at Brooks now contribute to production, more than offsetting natural decline. Financials for August are broadly in line with our expectations. The three new Thorsby wells drilled in August and September could be on stream for November with an individual IP rate of ~2
Companies: ALV ALV CE1 COP COP EDR IOG RDSA TETY TETY TXP
Higher metal prices saw CAML achieve a 52% and 131% increase in EBITDA and FCF respectively in the first half of 2021, facilitating an attractive 8p interim dividend declaration (up 2p on H1 2020). The H1 results are tracking our full-year estimates, which if achieved would put CAML on an undemanding EV/EBITDA multiple of just 4x and see the shares yield over 8% at current market price. Given average copper, zinc and lead prices across H2 to date are around 10% higher than our pricing assumption
We are publishing new forecasts and refreshing our view based on the company's recent results including their latest five year plan. Shanta's promising project pipeline means that >100Kozpa gold production is within sight (+62% vs 2021) by 2023 along with >200Kozpa production levels from 2025. AISC falls accordingly from $1371/oz to $568/oz. Assuming a flat $1800/oz gold price over the next two years we are forecasting a 2.5x uplift in EBITDA and near fourfold increase in net earnings. Net cash