Canaccord Adams' latest report on PRC:
Petro Resources Corporation
PRC : AMEX : US$0.45 BUY
Target: US$2.92
Irene Haas, MS, MBA 1.713.331.9443
irene.haas@canaccordadams.com
COMPANY STATISTICS:
52-week Range: US$0.36 - 3.50
Market Cap (M): US$16.5
Shares Out (M) fd: 36.7
Forecast Return: 593%
Ent Value (M): US$28.0
Debt/Capitalization: 31%
Current NAV /shr: US$2.92
Avg. Daily Vol. (000s): 160
EARNINGS SUMMARY:
FYE Dec 2007A 2008E 2009E
Production (boe/d): 341.6 579.6 1,063.0
% Natural Gas: 20% 28% 43%
EBITDA (M): -3.5 3.3 9.4
EV/EBITDA: NM 8.5x 3.0x
P/CF: 16.9x 2.4x 1.8x
EPS: Q1 -0.00 (0.01)A -
Q2 (0.09) 0.02A -
Q3 (0.04) (0.03)A -
Q4 (0.06) (0.00) -
Total (0.22) (0.02) 0.14
CFPS: Q1 0.02 0.01A -
Q2 (0.01) 0.04A -
Q3 0.02 0.04A -
Q4 0.00 0.03 -
Total 0.03 0.19 0.25
SHARE PRICE PERFORMANCE:
COMPANY SUMMARY:
Petro Resources Corporation is an oil-leveraged
independent oil and natural gas company. It engages in
low-risk development and exploration projects in the
Williston Basin, North Dakota. The company has a
diversified footprint of 47,000 net acres in the US
resulting from its strategic partnerships. Petro Resources
was incorporated in 2002 and is based in Houston,
Texas.
All amounts in US$ unless otherwise noted.
Energy -- Oil and Gas, Exploration and Production
A WELL POSITIONED MICRO CAP
Event
Petro Resources reported clean EPS of ($0.03) for the third quarter,
which was below consensus of $0.02. In our view, the delta is primarily
driven by lower gas volumes and higher than expected unit LOE and
interest expenses. Looking forward, we believe these items will improve.
Additionally, we believe the company is well positioned to weather the
storm with its stronger balance sheet. Based on the company’s revised
capital budget, we believe it has sufficient capital to fund its operations
and expected commitments for exploration and development through
2009.
Impact
Mixed. The company came in below consensus, but is well positioned to
increase production and considerably decrease cash costs in 2009.
Action
We are maintaining our BUY rating and reducing our target price from
$3.12 to $2.92. In our opinion, Petro Resources is attractively priced,
trading at a discount to our NAV estimate of $2.44. Additionally, we
believe there is upside to our target as we have not included the
company’s Haynesville/Bossier exposure in our NAV model.
Valuation
Our price target reflects our break up value of $2.92 per share (70% of
NAV + $1.21 option value) and is equivalent to 11.5 times our 2009E
CFPS of $0.25.
Next Catalyst
Results from the company's Surprise Propsect in the Haynesville/Bossier
trend in East Texas are expected by year-end. |
