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."
Copyright (C) 2014 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.