(By Balachander) CIBC World Markets Inc. upgraded shares of RMP Energy Inc. (TSE: RMP), a crude oil and natural gas explorer, to "Sector Outperformer" from "Sector Performer", saying strong results continue to drive growth.
The brokerage also increased price target on the stock to $4.25 from $3.25.
RMP provided a positive operational update, with fourth-quarter production estimated to be around 6,500 Boe/d (50 percent oil/NGLs), above CIBC's estimate of 6,140 Boe/d (50% oil/NGLs).
The team has done a commendable job of growing production and increasing the oil bias faster than expected, the brokerage said.
CIBC wrote that Ante Creek continues to show very strong productivity and has been a key driver of the strong operational performance. The brokerage increased its NAV for Ante Creek to about $0.83 from $0.52.
Assuming strip, CIBC expects RMP will grow 2013 production per share by roughly 18 percent (vs. the oil group at 20 percent).
On Wednesday, shares dropped 0.86 percent to trade at $3.45 on the Toronto Stock Exchange.