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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (1959)	7/31/2013 9:37:51 PM
From: 22jt	Read Replies (1) \| Respond to of 201982

TORC Oil & Gas Ltd. Geared up for success Initiating Coverage: BUY recommendation and C$3.00 target price We are initiating coverage on TORC with a BUY rating and C$3.00 target price. Our valuation is NAV based, and maps to a 2014E EV/DACF of 8.0x. In TORC, investors get a low risk asset to grow reserves and production (the Cardium), a potential ‘home run’ asset that provides significant upside potential (Monarch), and a clean balance sheet. As a result, we rate TOG as one of our favourite picks in the Junior E&P space. Why we think this stock will outperform: Cardium to drive growth: TORC only recently moved from exploration to development drilling in the Cardium. In our view this move will lead to an increase in per-well rates, and a bump in production in the back half of 2013. Monarch improvements. We believe TOG’s 150+ net section position at Monarch offers considerable upside potential, and in our view is not priced into the stock. With recent well rates showing significant improvements, we believe the move to an economic development program at Monarch will soon be within sight. Top Tier Management: TOG’s management team has a history of success, most notably with Bakken vehicle Tristar. In addition, officers and directors hold over 12% of the basic shares outstanding (and over 20% FD), so its interests are very much aligned with other shareholders. Attractive entry point. In sympathy with several small cap, oil-weighted Canadian producers, TOG’s share price has been under pressure over the last 6 months, despite management executing on its business plan following the reverse takeover of Vero. We believe this is reflective of a ‘throw the baby out with the bathwater’ mentality playing out in the junior energy space, and in our view has created an excellent entry point into TOG. All at a reasonable valuation. TOG currently trades at a slight discount on an NAV multiple (0.8x P/NAV vs. peers at 1.0x), and at a slight premium on cash flow (5.2x 2013E EV/DACF vs. peers at 4.6x). In our view, TOG should trade at a premium to the group due to its grade A management team, strong financial position (no debt as of Q1/13), and the upside potential of Monarch. More.....28 pages research.canaccordgenuity.com