Several "key catalysts" for Iona Energy upcoming, says broker
Fri 10:56 am by Deborah Bacal
proactiveinvestors.com
Casimir Capital is targeting a $2.25 price for Iona Energy ( CVE:INA), citing several "key catalysts" upcoming, and a large cash flow ramp anticipated by early 2014.
Iona Energy, formerly Northern Lights Acquisition Corp., is a Canada-based company focused on oil and gas development and exploration in the UK's North Sea.
Analyst Ryan Galloway notes that the third quarter saw Iona advance its T6 sidetrack well, expected to be on production in December, while its joint venture farmout process is nearing completion.
The company exited the quarter with a net working capital of around $62 million, consisting of a mix of cash and funds earmarked primarily for fourth quarter uses.
"We anticipate after making final payment for the Orlando assets in December, and completing the T6 well within the next 30 days, the company should exit the year with approximately $12mm in net working capital, prior to any further cash flows potentially stemming from the ongoing JV process," Galloway says.
He predicts that a successful farm-down and finalization of lending facilities should put Iona on track for development.
"We speculate that with a 20% farm-down, costs net to INA would be ~$139mm to first oil at Orlando. We anticipate funding for this development to primarily come from a reserve based lending facility which was conditionally approved at $130mm earlier this year."
He adds that with a likely increase to the line from both increased reserves and an increased working interest, as well as $12 million in working capital and an estimated $27 million in operating cash flow, Iona could be welll funded to advance Orlando.
With potential annual cash flows in the neighbourhood of $290 million at Orlando, Galloway expects Iona should then have the potential to organically fund further work at Kells and West Kick in 2014 and 2015, respectively.
He rates Iona with a "strong buy", and a price target of $2.25 - up considerably from its current trading price of 45 cents. |
