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The Company’s 4Q15e production figure was ~5% behind our forecast however cash flow was 7% ahead on higher realized pricing and lower production costs. Boulder’s 2P reserves were largely flat since being spun out of DeeThree Exploration in May 2015, however 1P and PDP reserves were up 5% and 3% respectively. F&D costs over this period came in at $18.18/boe 2P and $18.90/boe 1P. The Company remains on track to close its previously announced going-private transaction with ARC Financial on or before April 15th. Recall, the all-cash bid was $2.59 per share, which we have since adopted as our target price.
Boulder Energy
Boulder Energy has entered into a plan of arrangement with ARC Financial Corp. whereby the Company will be taken private for an all-cash consideration of $2.59 per share. Inclusive of $143 mm of debt, the deal is valued at $268 mm which implies compelling take-out metrics, particularly in light of where current commodity prices stand today. With our view this represents an attractive acquisition price that is unlikely to be topped, we have aligned our target price with the proposed cash bid of $2.59 per share while transitioning our ranking to Tender.
Impact: Positive. The going private deal marks a 70% premium to the Company's most recent closing price, which should be welcome to shareholders who purchased Boulder at recent lows.
Boulder Energy’s 2016 capital program includes spending of $26 - $28 mm and annual average production of 5,500 boe/d, which is below our prior forecast made following receipt of the Company’s 3Q15 actual results in early November. This conservative capital budget will aim to keep volumes flat from current levels by focusing efforts on early stage EOR projects while engaging in a 6 well drilling program across its Belly River asset.
Impact: Negative, Boulder issued what we would consider a prudently conservative spending plan, however, 2016e production guidance is below both our estimate and consensus, while current production is trending well below our expectation for 4Q15e and our notional 2015e exit production estimate, which will necessitate revisions to our forecast.
BOULDER ENERGY LTD (BXO CN) | CATHEDRAL ENERGY SERVICES LT (CET CN) | CENOVUS ENERGY INC (CVE CN) | GEOPARK LTD (GPRK US) | OPHIR ENERGY PLC (OPHR LN) | PERPETUAL ENERGY INC (PMT CN) | TAMARACK VALLEY ENERGY LTD (TVE CN)
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Impact: Negative in the short term given a production and cash flow miss, while current productive capacity of 7,000 boe/d is below our previous thinking and will result in revisions to our estimates. Management has signaled a shift to a more conservative capital spending budget in 2016e, which we think is the right move in this environment.
With this publication we are initiating coverage on Boulder Energy Ltd., a light-oil levered, growth oriented Small Cap E&P formed in May 2015 via the corporate reorganization of DeeThree Exploration Inc. Boulder emerged from the reorganization with a concentrated asset base located near Brazeau, AB, including ~8,000 boe/d of production, a contiguous 98,000 net acre foot print with minimal expiry issues, ~400 identified horizontal drilling locations over 7 distinct Belly River zones, and the infrastructure to support medium-term growth plans to 12,000+ boe/d.
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