Credit Suisse says: "NAV Growth Trumps Execution Risk; Revising
Estimates and Raising Target Price to $60 (from $57)"
Raise TP to $60, Reiterate Outperform. "Following 4Q12 results,
we raise our target price to $60 (from $57) as we account for
additional Utica inventory in our NAV estimate (from ~280 to 360
gross locations). We adjust our 2013/2014 EPS estimates -10%/+2% to
$1.11/$3.02 on changes to our production and commodity price
estimates and introduce our 2015 estimate of $3.16."
NAV Growth Will Continue to Overshadow Aggressive Guidance.
"While aggressive 2013 production guidance (200-212% production
growth) remains the primary push-back on the story, the reaction to
flattish 1Q13 production growth sequentially demonstrates little
near-term concern on the execution front, in our view. Despite 1Q13
guidance of 6.8-7.2 mboe/d, management reaffirmed 2013 production
guidance of 21.4-22.2 mboe/d on the 4Q12 call. Further discussion
with management this week following the announcement of delays to
the Cadiz I and II processing plants by MarkWest (
) indicate GPOR remains confident in its 2013 production estimates.
MWE anticipates having 385 mmcf/d of processing capacity online by
3Q13, and we estimate GPOR will average ~120 mmcfe/d of gas and NGL
production volumes in 4Q13 leaving ample capacity."
Additional Utica Results 30-60 Days Out. "GPOR recently
completed the two-well Lyon pad in southwestern Harrison County, OH
and expects to flow the wells back in 30-60 days. In addition, the
company recently began completion operations on the two-well Stout
pad, also in southwestern Harrison County."
Valuation. "GPOR trades at a 29% discount to our revised
'PD-Plus' NAV estimate compared to a 13% discount for its peers. On
EV/EBITDA (unhedged, futures strip), GPOR trades 8.8x 2013E and
4.2x 2014E vs. the peer group at 6.4x and 4.6x, respectively."