TPH comments on PE and JAG

[dan_s]

From TPH on 5-11-2018:

PE Stock Thoughts

Remains a top SMID-cap pick heading into Q2 on beat-and-raise potential

Sector: NAm E&P | Ticker: PE | Recommendation: BUY | Target: $45 | Close: $32.84

Equity has been on a tear over the last three months (+51% vs. E&Ps +24%), but we believe the name could continue to trade higher towards our $45/shr PT in the next 12 months with further quarters of execution. After a strong Q1 beat, we continue to see PE hitting its stride on execution moving into Q2 (TPHe 103mboepd / 66mbpd oil; Street 99mboepd / 64mbpd oil). For the year, we are still confident in outsized beats on both oil and overall volumes (TPHe 107 / Street 105 / Guidance 98-108mboepd) in 2018 as a result of high-grading of acreage driving a potential beat-and-raise year. Additionally, this model update incorporates a roll-out to 2025, laying out what kind of FCF generation could be expected which likely gets returned to shareholders longer-term.
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JAG Q1'18 Quick Look

Positive on Q2 guide and efficiencies data points

Sector: NAm E&P | Ticker: JAG | Recommendation: HOLD | Target: $18 | Close: $14.16

Would expect outperformance today on the heels of a solid Q2 guide and a strong outlook on efficiencies. Q1 prod'n of ~28mboepd (~22mbpd oil) compares to TPHe/Street ~27 (~22) on $219MM of all-in capex (on top of TPHe; FY guidance reaffirmed). Q2 guide is ahead of expectations at 31-32mboepd (25mbpd oil at midpoint) vs. TPHe/Street 30mboepd (24 oil) on TPHe combination of front-end weighted completion timing / well outperformance. Completions and drill times are improving dramatically q/q (13% improvement in stages/crew/day), with data acquisition and integration ahead of schedule. Listening for activity plans from here given previously messaged intentions to slow, as data from seismic and lateral targeting efforts starts to roll through. 12c clean EPS compares to TPHe/Street 13c/12c.