Stock Rating: Outperform (Unchanged) Target: Cdn$11.00 (unchanged) Hold on for 2014, it will be the biggest year yet for the company. CFPS - diluted $1.02 $1. $2.04 CF Netback ($ / boe) $17. $17. $22. Capex (mln) $178. $534. $370.
Stock Rating: Outperform (Unchanged) Target: Cdn$11.00 (unchanged) Hold on for 2014, it will be the biggest year yet for the company. CFPS - diluted $1.02 $1. $2.04 CF Netback ($ / boe) $17. $17. $22. Capex (mln) $178. $534. $370.
Stock Rating: Outperform (Unchanged) Target: Cdn$11.00 (unchanged) Hold on for 2014, it will be the biggest year yet for the company. CFPS - diluted $1.02 $1. $2.04 CF Netback ($ / boe) $17. $17. $22. Capex (mln) $178. $534. $370.
(Unchanged) Risk Rating: Above Average 2014 Guidance Confirmed Hold on for 2014, it will be the biggest year yet for the company
(Unchanged) Est. Total Return 50%
HIGHLIGHTS Stock Data - Q4e 2013: 52-week High-Low (Cdn$) $3.59 - $8.52 Shares Outstanding (mln) 172.5 Free Float Pct 87% Net Debt (mln) $343.1 Market Cap. (mln) $1,267.9 Enterprise Value (mln) $1,611.0 Production 2012a 2013e 2014e Oil & NGL's (bbls/d) 5,717 6,525 16,280 Nat. Gas (mcf/d) 65,812 95,850 166,320 Boe/d (6:1) 16,686 22,500 44,000 % Nat. Gas 66% 71% 63% Pricing 2012a 2013e 2014e WTI (US$/bbl) $94.00 $97.75 $92.25 AECO (Cdn$/mcf) $2.40 $3.10 $3.65 Corp. Oil & NGL's ($/bbl) $73.59 $72.00 $74.03 Corp. Nat. Gas ($/mcf) $2.62 $3.39 $3.98 Corp. Wellhead ($/boe) $35.55 $35.33 $42.45 * Strip pricing 13/14 (as at 11/27/2013) Estimates 2012a 2013e 2014e Cash Flow (mln) $111.0 $143.1 $359.8 CFPS - diluted $1.02 $1.14 $2.04 CF Netback ($/boe) $17.50 $17.43 $22.40 Capex (mln) $178.7 $534.8 $370.0 Net Debt (mln) $195.4 $343.1 $353.3 Valuation 2012a 2013e 2014e P/CF 4.0 x 6.5 x 3.6 x EV/DACF 5.0 x 10.4 x 4.4 x Net Debt / CF 1.8 x 2.4 x 1.0 x EV/BOE/D $36,161 $73,058 $37,592 P/NAVPS 1.4x EV/boe P+P $9.79 Source: Company Reports, NBF Estimates
Industry Rating (Oil & Gas Exploration and Production): Overweight (NBF Economics & Strategy Group) 2013 Production Pulled Back Production is expected to average 22,250 boe/d in 2013. This falls slightly below our estimate of 22,500 boe/d (29% liquids) and consensus at 23,000 boe/d. However, the company is set to meet its exit production of 40,000 boe/d (37% liquids).We estimate 2013 cash flow at $143.1 mln, or $1.14/sh compared with consensus at $1.20/sh. 2014 production is expected to average 44,000 boe/d Following the closing of its NGL acquisition yesterday, the company is expected to average 44,000 boe/d in 2014. BXE's 2014 capital program is set at $610 mln ($370 mln net) running 10 rigs. $250 mln of net capital will be allocated to drilling 146 (76.3 net) wells: 115 (65.7 net) will target the Cardium and 31 (10.6 net) will target the Mannville. $100 mln will be allocated to infrastructure and $20 mln to land and geological costs. BXE has guided towards 47,000 boe/d exit production in 2014. Credit facilities increased to $500 mln The company's previous credit facilities were $245 mln; we expect leverage to fall throughout 2014 with net debt of $353 mln, or 0.9x D/CF at 2014 year end. Maintaining Outperform and $11.00 Target Price The aggregation of the companys operational strengths, large inventory and promoted JV capital results in very low capital efficiencies (~$15,000/boe/d) and a high funded growth rate. In 2014 we estimate BXE to have a CFPS growth rate of 84% compared with the intermediate peer group average of 37%. BXE currently trades at a discount of 4.4x and $37,500/boe/d vs. intermediate peers at 6.1x and $51,000/boe/d. Stock Performance (Source: Bloomberg) Company Profile: Bellatrix Exploration is an intermediate exploration and production company with exposure to two core resource plays. The company's >330 net section land position in the Cardium provides exposure to ~1,500 potential drilling locations. Since converting from the True Energy Trust entity, the company has significantly changed the complexion of its assets, debt and management. The company is lead by industry veteran Raymond Smith as President & CEO.
Maintain Outperform & $11.00 Target Price The aggregation of the companys operational strengths, large inventory and promoted JV capital results in very low capital efficiencies (~$15,000/boe/d) and a high funded growth rate. In 2014 we estimate BXE to have a CFPS growth rate of 84% compared with the intermediate peer group average of 37%. BXE currently trades at a discount of 4.4x and $37,500/boe/d vs. intermediate peers at 6.1x and $51,000/boe/d. We are maintaining our Outperform rating and target price at $11.00. Our target price is based on a 4.0x 2014e EV/DACF multiple (was 3.9x) and includes $4.50/sh in risked upside (unchanged). Our base cash flow target multiple is discounted to the mid-weight commodity peer group average at 5.3x, while our risked upside is based on a 25% risk factor that we believe adequately represents the geologic, technical and financing risks associated with the companys plays.
In the table below we highlighted a breakdown of our target valuation:
Page 3 VALUATION OVERVIEW Multiple $/sh Base 2014e EV/DACF Target Multiple 4.0x $6.50 Unrisked Value Risk Factor Risked Value Resource Upside $mln $/sh % $mln $/sh Cardium $1,228.5 $11.39 20% $250.6 $2.32 Notikewin $2,329.3 $21.59 10% $232.9 $2.16 Total Resource Upside $3,557.8 $32.98 $483.5 $4.48 Combined Base & Resource Upside $39.48 $10.98 Target Price $11.00 Current Share Price $7.35 Return 50% Base 2P NAV (2012) $5.30 Source: NBF $6.50 $5.30 $4.48 $4.48 $28.50 $6.50 $6.50 $2.00 $6.00 $10.00 $14.00 $18.00 $22.00 $26.00 $30.00 Base Base + Risked Upside Base + Unrisked Upside 2P Blow Down NAV $2.00 $6.00 $10.00 $14.00 $18.00 $22.00 $26.00 $30.00 Unrisked Upside Risked Upside Base Cash Flow Component Target Price Current Price