Sweet 16 Growth Portfolio: TransGlobe Energy (TGA) reported a significant increase in production during the first quarter and they outlined a growth plan for 2012 & 2013 during their conference call. We have update our Net Income and Cash Flow Forecast, which members can find under the Sweet 16 Tab.
My Fair Value estimate remains the same.
TGA's cash flows from operations are well above their capital expenditures budget. They are rapidly increasing production and proven reserves. They also have the capital to pursue several high impact acquisitions and drilling programs. I have followed this company closely for over 12 years. Ross Clarkson has never set a goal that the company did not reach. His new goal is 40,000 bopd within five years.
TGA's forecast has been updated
TGA's forecast has been updated
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA's forecast has been updated
Analyst Actions: TransGlobe Energy Corp Target Price Lowered $1.50 at Credit Suisse on Q1; Shrs Down 4.5% 05/08 11:44 AM
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12:44 PM EDT, 05/08/2012 (MidnightTrader) -- Q1/12 Sees Inclusion of West Bakr Volumes; Lowering Estimates and Target Price to C$14.50 (from C$16.00).
Quarterly Results: First quarter production and cash flow of 16,720 bbls/d and US$36 million, respectively, were both slightly below our estimates of 16,750 bbls/d and US$39 million.
Production Records to Be Set: In the upcoming quarters we should see TransGlobe bring on additional production additions from its capital program at West Bakr (~1,500 bbls/d) and first production in Q3/12 at East Ghazalat (800 - 1,200 bbls/d). With a ready inventory of development volumes at West Gharib that should steady the company's base production, we expect to further production growth to set new corporate production records.
Inclusion of West Bakr Volumes: The inclusion of West Bakr production in Q1/12 has reduced the netbacks on a per barrel basis due to the concession's relatively less favorable fiscal terms and a diminished cost pool that carried over from the previous owner. As the company spends capital at West Bakr, we could see an improvement in netbacks as cost pools are somewhat replenished. Furthermore, we could see TransGlobe renegotiate its sales terms for better pricing. Overall, our previous revenue and cost structure assumptions appeared to be somewhat aggressive.
Revised Estimates: We have elected to maintain our production forecast but have made a number of changes, including a reduction in realized sales price, higher royalties and G&A, amongst other items. We currently project cash flow of US$166 million and US$239 million for 2012E and 2013E, respectively. Both estimates have been revised downward by roughly 10% to $1.30/$2.27.
Valuation: We currently maintain our Neutral rating but have lowered our target price from C$16.00 to C$14.50 (based on our risked NAV of $14.66).
Price: 11.69, Change: -0.55, Percent Change: -4.5
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12:44 PM EDT, 05/08/2012 (MidnightTrader) -- Q1/12 Sees Inclusion of West Bakr Volumes; Lowering Estimates and Target Price to C$14.50 (from C$16.00).
Quarterly Results: First quarter production and cash flow of 16,720 bbls/d and US$36 million, respectively, were both slightly below our estimates of 16,750 bbls/d and US$39 million.
Production Records to Be Set: In the upcoming quarters we should see TransGlobe bring on additional production additions from its capital program at West Bakr (~1,500 bbls/d) and first production in Q3/12 at East Ghazalat (800 - 1,200 bbls/d). With a ready inventory of development volumes at West Gharib that should steady the company's base production, we expect to further production growth to set new corporate production records.
Inclusion of West Bakr Volumes: The inclusion of West Bakr production in Q1/12 has reduced the netbacks on a per barrel basis due to the concession's relatively less favorable fiscal terms and a diminished cost pool that carried over from the previous owner. As the company spends capital at West Bakr, we could see an improvement in netbacks as cost pools are somewhat replenished. Furthermore, we could see TransGlobe renegotiate its sales terms for better pricing. Overall, our previous revenue and cost structure assumptions appeared to be somewhat aggressive.
Revised Estimates: We have elected to maintain our production forecast but have made a number of changes, including a reduction in realized sales price, higher royalties and G&A, amongst other items. We currently project cash flow of US$166 million and US$239 million for 2012E and 2013E, respectively. Both estimates have been revised downward by roughly 10% to $1.30/$2.27.
Valuation: We currently maintain our Neutral rating but have lowered our target price from C$16.00 to C$14.50 (based on our risked NAV of $14.66).
Price: 11.69, Change: -0.55, Percent Change: -4.5