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

To: TheBare who wrote (6349)	4/29/1999 12:07:00 PM
From: Geoff Trueman	Respond to of 24892

Cdn Hunter / Gas Oriented and Appreciating Canadian Hunter (HTR-T) released Q1 results this week and posted some good numbers -- $77 million in revenue, $46 million of cash flow and $10 in net earnings. HTR has 60 million shares outstanding and just $150 million in long term debt. Production was about 8200 oil and 35000 gas for 43200 BOEPD. No matter how I run the numbers, HTR appears to trade at a significant discount to its peer group. This may be partly attributable to the fact that HTR only recently made the transition to publicly-traded when it was spun-off from Noranda. Regardless, and even with the recent advance in HTR's share price, the numbers still look compelling. My usual basis for comparison is a ratio that takes total market capitalization plus long term debt and divides their sum by BOEPD multiplied by the cash flow for those barrels. In other words, what you would pay for the whole company and what you would get in return. Of the forty or so Canadian oil and gas stocks I cover, HTR is easily one of the cheapest. By way of comparison, look at PWT and RAX, arguably two of the best run companies in the field. I will have to use Q4 numbers for both companies as they have not yet released Q1. PWT has 45 million shares and $240 million debt, while producing about 37000 BOEPD and cash flow of $33 million in Q4. RAX has about 64 million shares and $475 million in long term debt, with 38500 BOEPD and $41 million in cash flow for Q4. Based on yesterday's share prices of $22 for PWT, $22 for RAX and $16.50 for HTR, the ratio noted above provides some very interesting results -- values of 11.5 for RAX, 9.25 for PWT and 6.15 for HTR. In other words, the market is valuing HTR at roughly 55% of RAX and 65% of PWT. While it is too soon to argue that HTR should trade at the same valuation as RAX and PWT, I will leave it to you to decide if there is potential for HTR to enjoy further price appreciation. An added bonus is the remarkably low level of debt on HTR's books. As a final note, EdperBrascan (EBC.A -T) currently holds about 40% of HTR's outstanding shares.