As usual in a BEAR market, investors overacted to a couple dry holes in their operations update. GTE is a true exploration company. There are going to be a few dry holes each year. Look for a rebound on Monday.
I have just posted an updated forecast for GTE under the Sweet 16 Tab. Take a hard look at Row 39 and keep in mind that the company is debt free with a lot of cash in the bank. Also, notice that my forecast is based on the low end of the company's production guidance.
All of the Canadian based E&Ps have been hammered this year. IMO it is because so many Americans have pulled money out of the TSX.
GTE
Re: GTE
Gran Tierra Energy Inc. (GTE:$4.60,00$0.04,000.88%) , a company focused on oil exploration and production in South America, announced today a 2012 capital spending program of $367 million for its exploration and production development operations in Colombia, Brazil, Peru and Argentina. The company said the capital spending program allocates $246 million for drilling, $39 million for facilities, equipment and pipelines, including $2 million associated with corporate activities, and $82 million for seismic activities.
Re: GTE
Download my forecast model and you will see that GTE is on-track to generate over $320 million in cash flow this year.
Per my forecast (based on $100/bbl realized oil price), GTE should generate about $470 million in 2012. More than enough to fund their capital expenditure budget.
As discussed in my recent "Sweet 16 Detailed Update", which was e-mailed to all EPG Premium Members on December 12, all of our Canadian companies have taken a beating this year. Risk adverse U.S. investors have pulled a ton of money out of the TSX. They have also abandoned companies with foreign operations, ignoring the incredible upside in these under-explored regions.
GTE and PMG are exploration companies focused primarily on Columbia. They are going to drill dry holes from time to time. However, they both have a solid base of production and proven reserves. Plus, when they do make a discovery, it far outweighs the cost of their seismic and dry holes. For GTE, the Moqueta Field development in 2012 is the key. See our profile on the company.
Per my forecast (based on $100/bbl realized oil price), GTE should generate about $470 million in 2012. More than enough to fund their capital expenditure budget.
As discussed in my recent "Sweet 16 Detailed Update", which was e-mailed to all EPG Premium Members on December 12, all of our Canadian companies have taken a beating this year. Risk adverse U.S. investors have pulled a ton of money out of the TSX. They have also abandoned companies with foreign operations, ignoring the incredible upside in these under-explored regions.
GTE and PMG are exploration companies focused primarily on Columbia. They are going to drill dry holes from time to time. However, they both have a solid base of production and proven reserves. Plus, when they do make a discovery, it far outweighs the cost of their seismic and dry holes. For GTE, the Moqueta Field development in 2012 is the key. See our profile on the company.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: GTE
CIBC on GTE:
Gran Tierra Energy Inc.
Spending $367MM In 2012 With Production Guidance Of 20 MBoe/d-21 MBoe/d NAR
Gran Tierra Energy announced a $367MM capital spending program for 2012, which includes plans to drill 11 wells in Colombia, 13 wells in Argentina, two wells in Brazil and one well in Peru. The company's 2012 average production guidance is for 20,000-21,000 Boe/d net after royalty.
Impact: Negative relative to expectations. We were previously expecting a $300MM capital program for 2012 and production of 22,400 Boe/d (NAR). We delayed the Moqueta ramp-up from February to August 2012 and increased the capital spending budget to be in line with company guidance.
We now expect production to average 20,680 Boe/d after royalty in 2012 and the capital budget to be $367MM. On the positive side this is still 18% Y/Y growth; GTE has $226MM in cash & cash equivalents and no debt, and expects to fund the 2012 program from cash from ops.
With the inclusion of the company's 2012 guidance in our model, our NAV estimate has decreased to C$6.90 (down from C$8.09). As a result, we are lowering our NAV-based price target to C$7.00 (down from C$8.00), but maintain our SO rating.
Gran Tierra Energy Inc.
Spending $367MM In 2012 With Production Guidance Of 20 MBoe/d-21 MBoe/d NAR
Gran Tierra Energy announced a $367MM capital spending program for 2012, which includes plans to drill 11 wells in Colombia, 13 wells in Argentina, two wells in Brazil and one well in Peru. The company's 2012 average production guidance is for 20,000-21,000 Boe/d net after royalty.
Impact: Negative relative to expectations. We were previously expecting a $300MM capital program for 2012 and production of 22,400 Boe/d (NAR). We delayed the Moqueta ramp-up from February to August 2012 and increased the capital spending budget to be in line with company guidance.
We now expect production to average 20,680 Boe/d after royalty in 2012 and the capital budget to be $367MM. On the positive side this is still 18% Y/Y growth; GTE has $226MM in cash & cash equivalents and no debt, and expects to fund the 2012 program from cash from ops.
With the inclusion of the company's 2012 guidance in our model, our NAV estimate has decreased to C$6.90 (down from C$8.09). As a result, we are lowering our NAV-based price target to C$7.00 (down from C$8.00), but maintain our SO rating.
Re: GTE
I will post an updated forecast model for GTE this afternoon under the Sweet 16 Tab.
Question: At what multiple of CFPS should a debt free company with incredible exploration upside trade for?
Keep in mind that GTE is funding their entire capital program with cash flow from operations and they already have a confirmed discovery / development project (Moqueta Field) that should double the company's production over the next two years.
GTE's CFPS:
2009 Actual: $0.63
2010 Actual: $0.77
2011 Forecast: $1.12
2012 Forecast: $1.51 (First Calls CFPS forecast is $1.41 for 2012)
GTE's Annual Production Growth:
2010 Actual: 13.9%
2011 Forecast: 20.6%
2012 Forecast: 17.8%
Question: At what multiple of CFPS should a debt free company with incredible exploration upside trade for?
Keep in mind that GTE is funding their entire capital program with cash flow from operations and they already have a confirmed discovery / development project (Moqueta Field) that should double the company's production over the next two years.
GTE's CFPS:
2009 Actual: $0.63
2010 Actual: $0.77
2011 Forecast: $1.12
2012 Forecast: $1.51 (First Calls CFPS forecast is $1.41 for 2012)
GTE's Annual Production Growth:
2010 Actual: 13.9%
2011 Forecast: 20.6%
2012 Forecast: 17.8%
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: GTE
BMO on GTE:
Gran Tierra Energy – (GTE) - $4.74, up $0.15 – Analyst – Christopher Brown – Outperform – TP-$7.50 - Gran Tierra announced its 2012 capital budget, which included substantial increases in Argentina, Brazil and Peru. Overall, drilling represented approximately two-thirds of the $367 million budget while seismic and geological activities accounted for over 20%. Colombia makes up approximately half of the budget while the remainder is split roughly evenly amongst the remaining regions. Of the 27 wells budgeted in 2012, only 10 are exploration locations. Given the company’s limited success in 2011, we believe a slight reduction in exploration drilling, combined with a larger allocation to pre-drill activities, should improve the company’s success rate going forward. Despite the loss of investor confidence going into 2012, Christopher views the company’s development focus in 2012 positively; Gran Tierra plans on pursuing water-injection at Costayaco, unconventional development opportunities, and full field development at Moqueta. Taking a safe approach with shareholder money may be prudent as the company has a poor history of exploration success. In line with company guidance, he has reduced his 2012E production forecast by 15% to 27,100 boe/d, while raising his capital projections. He now estimates a 2012E net asset value of $7.00/share versus previous estimates of $8.00. He has incorporated $0.50 of upside in arriving at his $7.50 target price. At the current share price of $4.74, the shares are trading approximately at their 2P value, and at 4.0x and 3.0x his projected 2011E and 2012E CFPS estimates, respectively. At these levels, Christopher believes Gran Tierra represents an attractive buying opportunity, particularly as several high-impact catalysts should materialize in the coming quarter.
Gran Tierra Energy – (GTE) - $4.74, up $0.15 – Analyst – Christopher Brown – Outperform – TP-$7.50 - Gran Tierra announced its 2012 capital budget, which included substantial increases in Argentina, Brazil and Peru. Overall, drilling represented approximately two-thirds of the $367 million budget while seismic and geological activities accounted for over 20%. Colombia makes up approximately half of the budget while the remainder is split roughly evenly amongst the remaining regions. Of the 27 wells budgeted in 2012, only 10 are exploration locations. Given the company’s limited success in 2011, we believe a slight reduction in exploration drilling, combined with a larger allocation to pre-drill activities, should improve the company’s success rate going forward. Despite the loss of investor confidence going into 2012, Christopher views the company’s development focus in 2012 positively; Gran Tierra plans on pursuing water-injection at Costayaco, unconventional development opportunities, and full field development at Moqueta. Taking a safe approach with shareholder money may be prudent as the company has a poor history of exploration success. In line with company guidance, he has reduced his 2012E production forecast by 15% to 27,100 boe/d, while raising his capital projections. He now estimates a 2012E net asset value of $7.00/share versus previous estimates of $8.00. He has incorporated $0.50 of upside in arriving at his $7.50 target price. At the current share price of $4.74, the shares are trading approximately at their 2P value, and at 4.0x and 3.0x his projected 2011E and 2012E CFPS estimates, respectively. At these levels, Christopher believes Gran Tierra represents an attractive buying opportunity, particularly as several high-impact catalysts should materialize in the coming quarter.
Re: GTE
http://seekingalpha.com/article/317829- ... urce=yahoo
two excerpts from article----------
Energy Stocks Experiencing Heavy And Unusual Insider Selling In December
Gran Tierra Energy Inc. (GTE): GTE is a Canadian oil and gas exploration and production company engaged in exploration activities in Colombia, Argentina, Peru and Brazil. In December, two insiders sold a total of 0.87 million shares for $4.36 million. A large majority of the shares sold (807,500) were by CEO Dana Coffield, who acquired those shares after exercising options, and he held 1.85 million shares after the sale of those shares. The remaining 60,000 shares were sold by COO Shane O'leary (60,000 shares), who also acquired those by exercising options, and he ended with no direct holdings (and 9,300 shares in indirect holdings) in GTE after the sale.
Furthermore, overall insiders sold only an additional 0.19 million shares in the remainder of the past year. This unusual and heavy insider selling is especially significant given that GTE currently trades near its lows, down almost 40% in 2011, a correction much steeper than its peers in the oil & gas exploration & production group. Also, it trades at a discount 8-9 forward P/E and 1.2 P/B compared to averages of 15.2 and 1.5 for the Canadian Exploration and Production group, which would imply that insiders should find shares attractive at these levels. However, the company has missed on its revenue and/or earnings estimates in each of the last four quarters.
Denbury Resources (DNR): DNR is engaged in the acquisition, exploration, development and operation of oil and gas properties in the Gulf Coast region. In December, two insiders sold a total of 83,183 shares for $1.38 million. The selling insiders included VP Raymond Dubuisson (63,183 shares) and Director Gareth Roberts (20,000 shares). VP Dubuisson ended with 146,637 shares after the sale, so the shares sold were a significant portion of his holdings in the company. Furthermore, the last insider sale prior to December was in March, and over the last year insiders sold a total of 540,811 shares, so that the selling in December represented a strong pickup at almost twice the average rate for the rest of the year. DNR shares trade at discount 13-14 forward P/E, and at 1.4 P/B, compared to averages of 21.5 and 5.3 respectively for the U.S. oil & gas exploration & production group.
Other major sales in the energy sector in December included a $0.86 million sale at independent energy exploration and development company Kodiak Oil & Gas (KOG); a sale of $4.2 million by two insiders in Western Refining Inc. (WNR), a refiner and marketer of crude oil and refined products in West TX, AZ, NM, UT, CO and the mid-Atlantic region; and a $4.6 million sale by four insiders at Oasis Petroleum Inc. (OAS), an independent oil & gas exploration & production company with activities, mainly in the Williston Basin in MT and ND.
two excerpts from article----------
Energy Stocks Experiencing Heavy And Unusual Insider Selling In December
Gran Tierra Energy Inc. (GTE): GTE is a Canadian oil and gas exploration and production company engaged in exploration activities in Colombia, Argentina, Peru and Brazil. In December, two insiders sold a total of 0.87 million shares for $4.36 million. A large majority of the shares sold (807,500) were by CEO Dana Coffield, who acquired those shares after exercising options, and he held 1.85 million shares after the sale of those shares. The remaining 60,000 shares were sold by COO Shane O'leary (60,000 shares), who also acquired those by exercising options, and he ended with no direct holdings (and 9,300 shares in indirect holdings) in GTE after the sale.
Furthermore, overall insiders sold only an additional 0.19 million shares in the remainder of the past year. This unusual and heavy insider selling is especially significant given that GTE currently trades near its lows, down almost 40% in 2011, a correction much steeper than its peers in the oil & gas exploration & production group. Also, it trades at a discount 8-9 forward P/E and 1.2 P/B compared to averages of 15.2 and 1.5 for the Canadian Exploration and Production group, which would imply that insiders should find shares attractive at these levels. However, the company has missed on its revenue and/or earnings estimates in each of the last four quarters.
Denbury Resources (DNR): DNR is engaged in the acquisition, exploration, development and operation of oil and gas properties in the Gulf Coast region. In December, two insiders sold a total of 83,183 shares for $1.38 million. The selling insiders included VP Raymond Dubuisson (63,183 shares) and Director Gareth Roberts (20,000 shares). VP Dubuisson ended with 146,637 shares after the sale, so the shares sold were a significant portion of his holdings in the company. Furthermore, the last insider sale prior to December was in March, and over the last year insiders sold a total of 540,811 shares, so that the selling in December represented a strong pickup at almost twice the average rate for the rest of the year. DNR shares trade at discount 13-14 forward P/E, and at 1.4 P/B, compared to averages of 21.5 and 5.3 respectively for the U.S. oil & gas exploration & production group.
Other major sales in the energy sector in December included a $0.86 million sale at independent energy exploration and development company Kodiak Oil & Gas (KOG); a sale of $4.2 million by two insiders in Western Refining Inc. (WNR), a refiner and marketer of crude oil and refined products in West TX, AZ, NM, UT, CO and the mid-Atlantic region; and a $4.6 million sale by four insiders at Oasis Petroleum Inc. (OAS), an independent oil & gas exploration & production company with activities, mainly in the Williston Basin in MT and ND.