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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Fiscally Conservative who wrote (141607)	11/4/2010 3:43:19 PM
From: Ed Ajootian	Respond to of 206323

The END of a transition quarter. Summary: Due to timing of oil sales, 3Q performance was soft, although much was accomplished through a debt deal and the sale of Cygnus. Highlights Volumes were the issue. END posted production of 28.5 MMcfed against our estimate of 33.1 MMcfed, due to the timing of tanker liftings in the North Sea that was responsible for about 2.3 Mmcfed of volumes as well as $3-$4 million of revenue. Given timing of completions in the Haynesville, an issue with virtually all operators, we are reducing our 4Q10 estimates from the top end of the range (3.5 Bcfe) to the lower end of the range (3.1 Bcfe). Carrying that theme forward combined with lower expected natural gas drilling, we are reducing 2011 production estimates from 16.9 Bcfe to 15.8 Bcfe. END misses the mark. Endeavour reported EPS loss of ($0.07) for 3Q10, which is below our estimate and the consensus of ($0.02). For 3Q10, the CFPS was ($0.02), as compared to our estimate of $0.03 and the consensus estimate of $0.05. EBITDA was weak, coming in at $11 million as compared to our estimate of $14.3 million and the consensus of $14 million. The lifting issue was responsible primarily for the shortfall. Raising estimates. Higher realizations and adjusted oil volume percentages are the drivers for our financial estimates moving higher for 2011. We are boosting 2011 EPS from ($0.06) to ($0.02) and EBITDA from $80.5 million to $87.2 million. That being said, we have pushed out Rochelle initial production from early 2012 to mid-2012. They have a plan. During 3Q, END priced a $150 million term debt deal and sold Cygnus for $110 million. The company should finish the year with over $100 million of cash and fully funded to bring on Bacchus and Rochelle in 2011 and 2012. The company is proposing a 1-for-7 share rollback boosting the stock price to around $8.50 per share and getting the stock on a number of investor's radar screens. Operational progress being made. West Rochelle has been sidetracked to the north and has encountered hydrocarbons that extend field and is expected to be a tie-back to the Rochelle field that can keep the fieldwide production at higher levels longer as well as boositng END's reserves. We expect END to spend some $150 million on bringing Rochelle on line in 2H11 and 1H12. In the U.S., Endeavour plans to continue a conservative 1-2 rig drilling program for the remainder of the year in the Haynesville due to net sales from U.S. production more than doubling from the previous quarter driven by the continued success in the Haynesville. The company is planning participate in two horizontal Marcellus wells to be drilled in 4Q to further evaluate the Daniel Field in Cameron County. Valuation. Our price target of $2.52 was previously based on 8.0x 2011 EBITDA, 2.8x 2012 EBITDA and a 30% IRR to our 2012 proved NAV of $3.48 per share. We are maintaining our Buy rating and $2.52 price target, which is now predicated on 9.0x 2011 EBITDA, 4.6x 2012 EBITDA and a 25% IRR to our 2012 NAV of $3.22 per share based on adjusting timing of wells and production. **************************************************** Above from today's update by Global Hunter. See full report at finance.groups.yahoo.com