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Transglobe Energy Upgraded To 'Sector Outperformer' By CIBC

 December 13, 2012 02:28 PM


(By Balaseshan) CIBC World Markets Inc. analyst Ian Macqueen upgraded rating of TransGlobe Energy Corp. (TSE: TGL) to "sector outperformer" from "sector performer". The brokerage raised price target of the upstream oil and gas company to C$13.25 from C$12.50.

TGL provided 2013 guidance and a Q4-2012 operational update. Production is forecast to range from 21-24 MBbls/d. Macqueen's estimate was in line but he has updated estimates based on the new guidance. The 2013 projected cash flow of $161 million is in line with his $163 million estimate.

The analyst said Capex is estimated at $129 million. Geographically, TGL expects to allocate 96% of the capital to Egypt and 4% to Yemen. A total of $54 million is planned for exploration (19.9 net wells) plus seismic data and another $75 million will be spent on development (25.3 net wells) plus facilities.

[Related -Ford Motor Company (F) Q2 Earnings Preview: Light on the Top Line?]

TGL discovered four new oil pools at West Gharib in the second half of 2012. Macqueen has included three new wells in his production model and 1.5 MMBbls of risked resources for the discoveries (3 MMBbls unrisked) as exploration upside.

Changes to the analyst's model have increased his net asset value from C$12.50 to C$13.29. He is raising price target and, based on the recent decline in share price, is upgrading rating. He believes TGL has good momentum going into 2013.

The brokerage lowered its 2013 cash flow per share estimate to $2.15 from $2.23, while maintaining its 2012 estimate of $1.69.

TGL is trading down 5.18% at $9.33 on Thursday.

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