Saratoga SARA reports
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am
Saratoga SARA reports
Any comments or opinions on Saratoga?
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am
Re: Saratoga SARA reports
Casimer Capital
Saratoga 2Q13 Results (SARA-NYSEMKT, $1.76)
Buy; Target: $3.75
Operational Results as Expected
Lackluster 2Q13 Production as Expected
As anticipated in SARA’s 1Q13 conference call, production during the 2Q13 was relatively weak (~2,500 Boe/d, or 3%< 1Q13), as operational improvements temporarily resulted in shut--‐in volumes. Additionally, the gas lift issue and third‐party bottleneck at Main Pass 25 were resolved in the 2Q, as expected (see our July 30, 2013 initiation report), with the resultant production increases anticipated to be felt in the 3Q.
The company’s “PEP” (production enhancement program) appears to be progressing generally as planned, and the production impact should also be seen in the 3Q.
Increased Focus on Higher-Impact Projects in the Near-Term
We would note that SARA is stepping up its “higher-impact” projects while substantially reducing capex ($45mm to $25mm).
As a result, the company will likely first pursue new development wells in general, while reprioritizing PEP into the #2 slot.
The development wells, one of which is being completed and will further enhance 3Q volumes, should, in our view, generally increase production in the near‐term more than PEP would have. Work on the latter, meanwhile, may be conducted during the near-term production surge, and enhance volumes on a sustainable basis commencing in the intermediate-term.
Conclusion
We are finetuning our cash flow estimates as detailed in Exhibit 1 to incorporate the 2Q results.
Our $3.75 price target is an average of three calculations (see the initiation report). We reiterate our Buy rating on SARA, and look forward to results of the recent initiatives in the 3Q and 4Q.
Saratoga 2Q13 Results (SARA-NYSEMKT, $1.76)
Buy; Target: $3.75
Operational Results as Expected
Lackluster 2Q13 Production as Expected
As anticipated in SARA’s 1Q13 conference call, production during the 2Q13 was relatively weak (~2,500 Boe/d, or 3%< 1Q13), as operational improvements temporarily resulted in shut--‐in volumes. Additionally, the gas lift issue and third‐party bottleneck at Main Pass 25 were resolved in the 2Q, as expected (see our July 30, 2013 initiation report), with the resultant production increases anticipated to be felt in the 3Q.
The company’s “PEP” (production enhancement program) appears to be progressing generally as planned, and the production impact should also be seen in the 3Q.
Increased Focus on Higher-Impact Projects in the Near-Term
We would note that SARA is stepping up its “higher-impact” projects while substantially reducing capex ($45mm to $25mm).
As a result, the company will likely first pursue new development wells in general, while reprioritizing PEP into the #2 slot.
The development wells, one of which is being completed and will further enhance 3Q volumes, should, in our view, generally increase production in the near‐term more than PEP would have. Work on the latter, meanwhile, may be conducted during the near-term production surge, and enhance volumes on a sustainable basis commencing in the intermediate-term.
Conclusion
We are finetuning our cash flow estimates as detailed in Exhibit 1 to incorporate the 2Q results.
Our $3.75 price target is an average of three calculations (see the initiation report). We reiterate our Buy rating on SARA, and look forward to results of the recent initiatives in the 3Q and 4Q.
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am