Opinions Josef Schachter
Pengrowth EnergyPGF.TOTOP PICKApr 07, 2017
Stock price when the opinion was issued
As of Jan 09, 2020. Market Open.
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Benj GallanderBenj Gallander
They are trapped by their hedges at this time. They come off next year and that should help. He is happy to hold it. Next year we could see better results. He would not buy during tax loss selling.
Benj GallanderIt is a high risk opportunity. A major investor just bought more. They have a new CEO. They are in a better space and debt is down. (Analysts’ target: $1.01).
Benj GallanderThe stock has bounced because of the higher oil price. It has sold assets to bring down debt, but debt is $600 million compared to an equity base of $1 billion, so it is still a bit high. At this point, they don’t have any key assets for sale. Their low production is 19,000 boe/day, which is this quarter. They will bring on more wells to bring production to 23,000 boe/day by the end of the year. Cash flow will be about $0.20 per year. His target for this year is $2 and $4.50 for the next 3-to-5 years. The company has a new CEO, with relevant (thermal oil) experience.
He is underwater with this. He likes to think it is going to turn, and he’s willing to hold on. They paid down an awful lot of debt. It seems like a good speculative play, but he isn’t willing to put more money into it.
Benj Gallander
This was sitting at over $2 billion in debt. They just announced that they had paid down $500 million. Since then they have made 2 asset sales. Once they pay down the debt, they will be below $900 million. They are still looking to sell the Swan Hills which he thinks they potentially can for $250 million. This will be a company with an equity component of almost $1.8 billion and $600 million in debt, and they have solved the problem. The big thing is that Lindberg is ramping up, and right now they are at about 15,000 BOE’s a day over that, and by the end of the year that number will be 19,000 or 20,000 because they are doing 7 well-pairs to bring it on. They are also moving on phase 2, which will bring production in 2020 to 38,000-39,000 BOE’s a day. Once they have this debt out of the way, they can grow their Montney assets. BV is $2.71 and NAV is $2.75. He has a $3.60 12-month target. The bears are looking at the debt and are missing the point of the rising value of the asset base and the generating of cash. (Analysts price target is $1.75.)