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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: architect* who wrote (17237)	4/20/2011 10:22:44 AM
From: architect*	Read Replies (2) \| Respond to of 24980

Coastal Energy (CEN : TSX-V : C$6.38) - Buy - Target:C$9.25 (from Canaccord) Coastal Energy (CEN : TSX-V : C$6.38) - Buy - Target:C$9.25 Q4 results Coastal announced its 2010 financial results and reserves yesterday. As with all growth stories, much has changed since year-end with some early exploration success on the books to build its production base in 2011 with new discoveries online in May and beyond. Reserves in line: Year-end 2010 reserves for its offshore oil assets were 27.1 mmbbls gross, in line with our expectations for a YoY decrease due to reservoir quality at Bua Ban. The NPV10 after-tax was reported for December 31, 2010 at $583.6 million, nearly flat to 2009's reported NPV of $577.1 million. NPV10 at April 1, 2011 was reported as $716.2 million, an increase of 23% from the December 31 figure. Q4 production slightly better: Q4 production of 5,627 bbl/d was slightly ahead of our expectations for 5,325 bbl/d. As expected, Q4 was impacted by outages due to weather and planned equipment upgrades. Missed earnings and cash flow: Earnings were impacted ($0.20A loss vs. $0.03E) by some year-end adjustments on hedges required by its lender and by the write-down at Bua Ban. Cash flow ($0.08A vs. $0.18E) was impacted by higher operating costs and lower revenues due to oil volumes in inventory at December 31. Valuation & recommendation We maintain our BUY recommendation and C$9.25 target, which is based on 5.0x P/CF and represents 1.3x its booked 2P NAV of $7.23 and 0.9x its risked portfolio NAV of $10.77. We note that the unrisked exploration upside is more than $20.00/share, incremental to booked 2P NAV of $7.23