Chaparral Energy (CHAP) Update - Feb 18

[dan_s]

I've updated my forecast/valuation model for CHAP and posted it to the EPG website.

The company should report good Q4 results with production up ~1,500 Boepd quarter-over-quarter, but their year-end reserve report and guidance for 2020 are key to this one staying in our Small-Cap Growth Portfolio.
Based on the company's 12/31/2018 reserve report, CHAP's net asset value is over $5.00/share.
On 12-16-2018 > Stifel's price target was $9.60.

If CHAP can convince the market that they can continue growing production and proven reserves while limiting capex to cash flow from operations the stock has upside.
In 2019 CHAP increased production by more than 25% year-over-year, but they outspent operating cash flow by a wide margin. That is a "Big No No" in this market, which seems to give little to no value for production and reserve growth.