Clik here to view.
English: Manitoba Highway 5 route marker, with buffalo removed (Photo credit: Wikipedia)
Oct . 31
Legacy Oil + Gas Inc.
LEG : TSX : C$6.85 BUY Target: C$11.25
COMPANY DESCRIPTION:
Legacy is a uniquely positioned, well-capitalized junior oil and natural gas company with a proven management team committed to aggressive, cost-effective growth of light oil reserves and production in the WCSB.
Event
Legacy provided an operational update characterized by incremental improvement in a number of core areas with respect to drilling time and drill costs, type-curve performance and initial production rates. A particular highlight included five Q3/12 Mississippian wells in the Alameda/Steelman area (targeting the Frobisher and Midale formations) that averaged IP30 rates of 440 BOE/d per well.
Well performance in the Bakken and Spearfish (both in Manitoba and North Dakota) continues to outperform management (and third-party engineer Sproule’s) type curves .
In total, the company drilled a robust Q3/12 program with 46 gross (36.2 net) wells and 100% success.
Impact
Positive While the tone of the release alludes to a potential beat
on the forthcoming Q3/12 results (to be released November 8, 2012), we
await the actuals prior to altering our estimates. We have made some
tweaks to our risked upside scenarios in the Spearfish (primarily related
to the inclusion of long, rather than short wells in our long-term
Manitoba assumptions, and reduced average well costs), though this has
not impacted our target price.
Recommendation
We are reiterating our BUY recommendation on Legacy, with an unchanged C$11.25 target price. Our target remains based on a 6.0x 2013 EV/DACF multiple supplemented by $3.05 of risked Bakken and Spearfish upside. Legacy currently trades at a 5.3x 2013 EV/DACF multiple and $82,127 per forecast BOE/d.
Related articles
- Montana oil lease sale could mark Bakken expansion (billingsgazette.com)
Image may be NSFW.
Clik here to view.
Image may be NSFW.Clik here to view.
