logo
  Join        Login             Stock Quote

Fairborne Energy PT Cut To $3.25 By CIBC, 'Sector Performer' Maintained

 April 17, 2012 01:49 PM


CIBC World Markets Inc. lowered its price target on shares of Fairborne Energy Ltd. (TSE:FEL) to $3.25 from $3.50, while maintaining its "Sector Performer" rating.

After the company's announcement of Sinclair Property sale, the brokerage reduced its 2012 cash flow per share estimate to $0.49 from $0.59 and its 2013 estimate to $0.71 from $0.84.

Fairborne announced that it is selling its interest in the Greater Sinclair area in Manitoba/Saskatchewan for $80 million to a private oil and gas company. CIBC believes the deal is very accretive at $25.46/Bbl on a P+P reserves basis and about $114,300/Bbl/d on a producing basis.

Prior to the sale, CIBC estimated 2012 discounted cash flow of 3.8 times (versus the group at 2.8 times) with about 26% of its bank line not utilized. Hence, its biggest concern for Fairborne was its balance sheet strength. While Fairborne is addressing debt concerns, it now has limited future low-risk oil opportunities to exploit.

[Related -Four Stocks in the Dow Making Fresh 52 Week Lows]

The firm has updated net asset value (NAV) to reflect the divestiture of reserves and cash inflow. With the sale, its Risked NAV decreases to $4.02/share. Applying the same 0.8 times as before, CIBC has decreased price target to $3.25/share.

Fairborne trades at a discount to its peers at 49% of its Risked NAV and at 6.1 times 2012 EV/DACF versus its peers at 67% and 7.8 times, respectively. While the company's balance sheet is now strengthened, the company is now more reliant on increasing natural gas prices.

Fairborne Energy, which is an exploration and production company, is engaged in the business of exploring for, developing, acquiring and producing crude oil and natural gas in Western Canada. Its portfolio is concentrated in four main core areas in Alberta, Saskatchewan and Manitoba that include Clive, Harlech, Marlboro and Sinclair.

[Related -Some Thoughts on Greece’s Don’t-Call-It-a-Default]

FEL is trading down 1.52% at $1.95 on Tuesday.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageFour Stocks in the Dow Making Fresh 52 Week Lows

“What gets weak tends to get weaker; what gets strong tends to get read on...

article imageGreece And The Cemetery For Your Wealth

The Greek default is merely the opening act of the worst sovereign-debt crisis in history. By the time it read on...

article imageAll Signs Point To Higher Gold Prices

In the face of historic monetary stimulus from nearly every major central bank in the world over the past read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Greece And The Cemetery For Your Wealth
More Articles on: Oils/Energy



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.