UTS Energy Corporation | Richard Wyman, MBA, 1.403.508.3886
UTS : TSX : C$5.34 | C$2,521.8M | Speculative Buy , Target C$7.00
• Preliminary development plans and year-end results; maintaining
SPECULATIVE BUY recommendation and 12-month target price of C$7.00
Event
UTS reported year-end results and preliminary development plans for the new Frontier
and Equinox (formerly referred to as Lease 14) oil sands projects on its joint-venture
acreage with Teck Cominco. Financial results are not meaningful for the valuation of UTS
at this pre-production stage of corporate development. Working capital at year-end was
$383 million, which together with funding on a promoted basis by partners means that
UTS does not require external funding until the end of 2009.
Impact
Positive. UTS and its partner Teck Cominco are advancing two new oil sands projects
through the regulatory process: one at Equinox which contemplates bitumen production of
50,000 b/d; and one at Frontier which contemplates bitumen production in the range of
100,000 to 160,000 b/d.
Action
We maintain our SPECULATIVE BUY recommendation and 12-month target price of
C$7.00, which is based on the pre-tax contingent asset value of UTS’s interest in the Fort
Hills Partnership, the Equinox development and a risked contingent asset value of the new
Frontier project.
