"Just wondering if you might share with the board which analyst touted the $1.60 sp. The last post on the board about any analyst reccomendation was by Jurek and the target was $1.30 by Tristone Capital?"
OF COURSE, COMING FROM OUR LEADER IT MUST BE THE GOSPEL TRUTH
HOW ABOUT THIS
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![]() Analyst Research Report Snapshot |
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| title: |
CLL: Equity Issue Provides Much Needed Liquidity |
| price: |
$25.00 |
| provider: |
Raymond James Ltd. (Canada) |
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| file info: |
Available for Immediate Download date: 09 Jun 2009 pages: 8 type: AcrobatPDF ![]()
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| companies referenced: |
CLL.TO |
| summary: |
RATING OUTPERFORM 2 Target Price (6-12 mths) $1.75 Closing Price $1.07 Total Return to Target 64% Event Connacher has closed on its recent equity issue. The issue provided over $170 mln of cash (before transaction costs) and added 191.8 mln shares to the float - bringing the fully diluted share count to 444 mln including all options and warrants or 406 mln based on the treasury method. Action Even though the issue was dilutive to our NAV, we believe the growth story of being able to achieve 50,000 bbl/d by 2015 is back on track. CLL should now be able to capitalize on its growth prospects sooner rather than later. Incorporating the dilution into our Risk Adjusted NAV, we get $1.78 per share f.d. As a result, we are decreasing our target price to $1.75 (from $2.25) but maintaining our OUTPERFORM rating. Connacher is one of the few companies in the oil sands space that has been able to execute a project on-time and nearly on-budget while delivering operationally. Since Algar is very similar in size and in scope to Great Divide - our expectation is for a similar level of proficiency. Analysis In our last note (May-13-09, share price: $1.47) we identified that Connacher would likely need to issue equity to continue its growth objectives and to recapitalize its balance sheet. With the cash now in hand and oil prices also recovering to some degree, we expect the next move will be to reinstate the Algar project. We estimate that the company has approximately $275 mln of working capital which should be sufficient to fund the company’s operating and capex requirements going forward (assuming Algar gets reinstated shortly). So what does the company look like after Algar is built? Using our production estimates and a US$60 WTI estimate, CLL could generate ~$166 mln of EBITDA once Algar is producing at capacity (recall that the project needs approximately 275 days to complete construction and will add 10,000 bbl/d at capacity over the following 9 to 12 months). Based on Friday’s close price, this would translate to an EV/EBITDA multiple of 5.7x. Valuation Our $1.75 target price is set at our Risk Adjusted NAV of $1.78 which assigns value to each of Connacher’s divisions - oil sands, conventional, refining and its interest in Petrolifera Petroleum (PDP-TSX, UNDERPERFORM, recent: $3.34). |
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